The majority of the $47 billion in green tax credits claimed between 2006 and 2021 went to high-income households, analysis shows.
The majority of the $47 billion in green tax credits claimed between 2006 and 2021 went to high-income households, according to a new study published Monday by the National Bureau of Economic Research. [emphasis, links added]
Households in the top 20% of earnings nationally received about 60% of clean energy tax credits, while the bottom 60% of households received just 10%, according to the paper written by Severin Borenstein and Lucas W. Davis, two economists at the University of California, Berkeley.
This pattern of high-income filers claiming the lion’s share of green tax credits has stayed “relatively constant” during the time period until it experienced a “slight broadening” with the introduction of an electric vehicle (EV) credit in 2018.
In the case of EVs, the top 20% of earners receive 80% of the credits, while the top 5% of earners receive 50%, according to the study.
There was also only a small correlation between greater green tax credits and the adoption of technology such as heat pumps, solar panels, and EVs.
“The cost-effectiveness of tax credits hinges on their ability to increase adoption of clean energy technologies,” the study noted. “Overall, we find little correlation between tax credits and technology adoption.”
For example, the paper found no evidence that heat pump shipments responded to any of the five policy changes in heat pump subsidization between 2006 and 2021.
“[A] credit was introduced in 2006, yet adoption decreased in that year,” the study stated. “The credit was not available in 2008 and 2018, but there was no discernible decline in heat pump shipments during those years.
“Moreover, during 2009 and 2010 the credit increased from 10% to 30%, yet there was no pronounced increase in heat pump shipments in those years.
“Finally, and perhaps most strikingly, the tax credit increased from 10% to 30% starting in 2023, but rather than increasing, shipments decreased by 16% between 2022 and 2023.”
The Biden administration has introduced more green subsidies in recent years using hundreds of billions of dollars of taxpayer money allocated in the Inflation Reduction Act.
One of those subsidies is a $7,500 EV tax credit aimed at boosting consumer demand for the product.
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