Testimony

Federal Energy Related Tax Policy and Its Effects on Markets, Prices, and Consumers

Mar 29, 2017 | Joseph E. Aldy
US House Committee on Energy and Commerce, Subcommittee on Energy

Excerpt

Thank you Chairman Upton and Ranking Member Rush and members of the Subcommittee on Energy for inviting me to speak today.

My name is Joe Aldy, and I am an Associate Professor of Public Policy at the Harvard Kennedy School. My research and teaching focus on the rationale for, design, and evaluation of energy and environmental policy.

The Federal tax code has subsidized energy through tax expenditures for more than a century. The focus, scale, and design of energy tax expenditures have evolved over time. Nonetheless, the federal tax code today includes an array of energy- and technology-specific provisions intended to subsidize the investment and production of energy as well as investment in energy-efficient equipment. These subsidies have influenced energy and power markets, energy prices and energy innovation, and air pollution and other environmental outcomes in the United States. They also could play an important role in enabling comprehensive tax reform in which tax expenditures favoring specific interests and activities are exchanged for lower tax rates on personal and business income.