US Senate passes energy tax credit extension

Sponsored by Charles B Rangel, of NY and introduced in May, the Senate added the bill to the Renewable Energy and Job Creation Act, which the US House of Representatives passed in May.

By Ann Steffora Mutschler, Senior Editor -- Electronic News, 9/24/2008

In a move that likely has many semiconductor companies involved in alternative energy, such as Applied Materials Inc, jumping for joy, the US Senate Tuesday passed Bill H.R.6049 by a Yea-Nay vote of 93-2, which amends the Internal Revenue Code of 1986 to “provide incentives for energy production and conservation, to extend certain expiring provisions, to provide individual income tax relief, and for other purposes.”

Sponsored by Charles B Rangel, of NY and introduced in May, the Senate added the bill to the Renewable Energy and Job Creation Act, which the US House of Representatives passed in May.

The House still needs to approve the Senate version of the bill before it can go to President George Bush for his approval.

The tax credit, which expired last December, can cover up to 20% of qualified R&D spending.

Lawmakers resisted making the tax break permanent mainly because of its price tag of approximately $7 billion a year, with some critics calling the tax credit a government subsidy for large businesses.

The Senate bill, which passed by a 93-2 vote, included clean energy tax incentives, a revamp of the alternative minimum tax paid by individual taxpayers and other extensions of expiring tax cuts.

In addition to extending the R&D tax credit until the end of 2009, the Senate bill increases the percentage of R&D spending covered from 12 to 14% under one way of claiming the credit.

As a result of the bill passing, solar stocks including First Solar, SunPower, Trina Solar, Yingli Solar, SunTech Power, Evergreen Solar, and others saw a rise in share prices as much as 10%.