Energy Tax Act
Encyclopedia
The Energy Tax Act is a law passed by the U.S. Congress as part of the National Energy Act
. The objective of this law was shift from oil and gas supply toward energy conservation; thus, to promote fuel efficiency
and renewable energy
through tax
es and tax credit
s.
, wind
, or geothermal
sources of energy. The credit is equal to 30% of the cost of the equipment up to $2000, as well as 20% of costs greater than $2000, up to a maximum of $10,000. There were also tax credits to businesses for renewable energy equipment, amounting to a maximum of 25% of the cost of the equipment.
The renewable energy credits of this law were increased by the Crude Oil Windfall Profits Tax Act of 1980.
s and other large passenger cars
exempt from this tax, thus increasing the latter's popularity. Many argue that the 6000 pounds (2,721.6 kg) limit is actually counter-productive to the purpose of the Gas Guzzler tax by encouraging the use of large SUVs that avoid the tax due to their high weight. The following chart shows the tax for various levels of MPG as of 2006.
The combined fuel economy MPG value (55% city, 45% highway) is used to determine tax liability. The MPG value is also adjusted slightly to account for differences in test procedures made since the base year, but it is not adjusted for in-use short fall. The unadjusted combined MPG of a vehicle can be approximated from the city and highway values provided in the Fuel Economy Guide by the following equation:
Since this is an approximate calculation, the actual gas guzzler tax may be off by one tax bracket.
National Energy Act
The National Energy Act of 1978 was a legislative response by the U.S. Congress to the 1973 energy crisis. It includes the following statutes:* Public Utility Regulatory Policies Act * Energy Tax Act * National Energy Conservation Policy Act...
. The objective of this law was shift from oil and gas supply toward energy conservation; thus, to promote fuel efficiency
Fuel efficiency
Fuel efficiency is a form of thermal efficiency, meaning the efficiency of a process that converts chemical potential energy contained in a carrier fuel into kinetic energy or work. Overall fuel efficiency may vary per device, which in turn may vary per application, and this spectrum of variance is...
and renewable energy
Renewable energy
Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...
through tax
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
es and tax credit
Tax credit
A tax credit is a sum deducted from the total amount a taxpayer owes to the state. A tax credit may be granted for various types of taxes, such as an income tax, property tax, or VAT. It may be granted in recognition of taxes already paid, as a subsidy, or to encourage investment or other behaviors...
s.
Tax credits for conservation
This law gave an income tax credit to private residents who use solarSolar power
Solar energy, radiant light and heat from the sun, has been harnessed by humans since ancient times using a range of ever-evolving technologies. Solar radiation, along with secondary solar-powered resources such as wind and wave power, hydroelectricity and biomass, account for most of the available...
, wind
Wind power
Wind power is the conversion of wind energy into a useful form of energy, such as using wind turbines to make electricity, windmills for mechanical power, windpumps for water pumping or drainage, or sails to propel ships....
, or geothermal
Geothermal power
Geothermal energy is thermal energy generated and stored in the Earth. Thermal energy is the energy that determines the temperature of matter. Earth's geothermal energy originates from the original formation of the planet and from radioactive decay of minerals...
sources of energy. The credit is equal to 30% of the cost of the equipment up to $2000, as well as 20% of costs greater than $2000, up to a maximum of $10,000. There were also tax credits to businesses for renewable energy equipment, amounting to a maximum of 25% of the cost of the equipment.
The renewable energy credits of this law were increased by the Crude Oil Windfall Profits Tax Act of 1980.
Gas guzzler tax
The Act also created the gas guzzler tax which applies to the sales of vehicles with official EPA-estimated gas mileage below certain specified levels. In 1980, the tax was $200 for a fuel efficiency of 14 to 15 miles per gallon, and was increased to $1800 in 1985. In 1980, the tax was $550 for fuel efficiencies of 13 mpg and below, and was changed in 1986 to $3,850 for ratings below 12.5 mpg. The Gas Guzzler tax only applied to cars under 6000 pounds (2,721.6 kg), which made the largest SUVSport utility vehicle
A sport utility vehicle is a generic marketing term for a vehicle similar to a station wagon, but built on a light-truck chassis. It is usually equipped with four-wheel drive for on- or off-road ability, and with some pretension or ability to be used as an off-road vehicle. Not all four-wheel...
s and other large passenger cars
Automobile
An automobile, autocar, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor...
exempt from this tax, thus increasing the latter's popularity. Many argue that the 6000 pounds (2,721.6 kg) limit is actually counter-productive to the purpose of the Gas Guzzler tax by encouraging the use of large SUVs that avoid the tax due to their high weight. The following chart shows the tax for various levels of MPG as of 2006.
| Unadjusted MPG (combined) | Tax |
|---|---|
| at least 22.5 | No tax |
| at least 21.5, but less than 22.5 | $1000 |
| at least 20.5, but less than 21.5 | $1300 |
| at least 19.5, but less than 20.5 | $1700 |
| at least 18.5, but less than 19.5 | $2100 |
| at least 17.5, but less than 18.5 | $2600 |
| at least 16.5, but less than 17.5 | $3000 |
| at least 15.5, but less than 16.5 | $3700 |
| at least 14.5, but less than 15.5 | $4500 |
| at least 13.5, but less than 14.5 | $5400 |
| at least 12.5, but less than 13.5 | $6400 |
| less than 12.5 | $7700 |
The combined fuel economy MPG value (55% city, 45% highway) is used to determine tax liability. The MPG value is also adjusted slightly to account for differences in test procedures made since the base year, but it is not adjusted for in-use short fall. The unadjusted combined MPG of a vehicle can be approximated from the city and highway values provided in the Fuel Economy Guide by the following equation:
Since this is an approximate calculation, the actual gas guzzler tax may be off by one tax bracket.
External links
- Energy tax credits, colby.edu
- Legislation affecting the renewable energy market, doe.gov
- Congressional energy brief, ncseonline.org