The Positive Revenue and Economic Impact of Section 179D the Commercial Buildings Energy-Efficiency Tax Deduction

Abstract

The United States Internal Revenue Code has had a tax deduction for the design of energy efficient public or commercial buildings since 2005. However, this tax break has always been a short-term provision, extended near year end for a year or two at a time, largely because of budget exigencies created by Congressional PAYGO rules. Since the provision ostensibly costs the federal government a modicum of foregone revenue, Congress must find a way to make up for that revenue.

However, a proper accounting for the true cost savings from reduced energy consumption from the implementation of 179D would demonstrate that the provision almost assuredly saves governments--the federal, state, and local altogether--money from its implementation, by allowing local governments to overcome purely political short-term budget constraints and allowing them to make decisions that are best for taxpayers in the long run by incentivizing cost-effective energy-saving investments.