AAMA e-News: Opening Thoughts from the President and CEOOctober 31, 2011
The IRS recently released details of the success of the 2009 non-business energy (25c) tax credit, which offered a 30% tax credit to homeowners for the purchase and installation of energy-efficient products. This data proves that with the proper incentives, homeowners will purchase building products to reduce their energy bills. Even in a severely recessed economy, 2.3 million homeowners seized the tax credit opportunity to purchase and install energy-efficient windows and skylights throughout 2009. Additionally, 1.8 million homeowners made purchases of energy-saving exterior doors. (Click here to view the related article in this month’s issue.)
In total, U.S. homeowners asserted purchases of $25.1 billion in non-business energy-efficient products during 2009. In addition to fenestration windows, doors and skylights, products under this category also included high-performance insulation and roofs, air circulating fans and various energy-efficient home product and equipment upgrades designed to properly seal the building envelope and ensure that energy is utilized at peak performance levels.
Unfortunately, federal agencies continue to provide billions of dollars in incentives to support alternative energy-generating and delivering projects. While this endeavor may prove to be a valuable investment in the future, it should be clear that conserving energy, whether generated by gas, electricity, solar or wind power, is the highest imperative. Delivering energy to a home that is not properly insulated or has inefficient window and door products is an easily preventable waste of resources.
According to Senator Olympia Snow (R-ME), the window and door tax credit or rebates that would have continued to reduce utility bills for homeowners and put more people back to work were diverted to ethanol and wind power projects. While these clean energy projects may pay off in the long haul, their immediate impact on energy conservation and job creation is negligible.
In a separate 2009 tax credit report, titled “Who Claimed the Energy Efficient Improvement Tax Credit?” the National Association of Home Builders (NAHB) states that the “while the largest states, in terms of homes and population, witnessed the largest tax credit claims, there was also geographic clustering of credit claims on a per taxpayer basis.” The data shows increased replacement in older housing stock and higher percentages of taxpayers claiming an energy tax credit in the upper Midwest and Northeast states.
The NAHB article provides two plausible explanations as to why homeowners in the Northeast and upper Midwest states expended the tax credits. Homeowners in cold weather climates have more to gain from energy-efficient improvements in terms of reduced utility bills. Another explanation offers that states containing older homes are more likely to make improvements to the energy efficiency of their homes, whereas states clustered with newer construction do not have as great a need for such enhancements.
Terry Abels, Vice President of Sales and Marketing at Chelsea Building Products, agrees that this demonstrates an excellent example of a “tax credit program that actually worked. It created energy efficiency and put remodelers and building products companies to work.”
Although these observations do not necessarily translate to other years’ tax credit programs, Abels notes that “this is the first positive documentation of the impact of the stimulus” that we’ve seen. A reasonable deduction is that states with larger populations produced larger numbers of taxpayers claiming the credit – a trend we could afford to experience again in the future. Overall, NAHB reported that 93% of tax credit claims were made by taxpayers who have an adjusted gross income of $200,000 or less, which is indicative of a middle class tax program.
In total, tax credits issued to homeowners in 2009 exceeded $5.1 billion. The positive net economic impact of a comprehensive tax credit program is clear, and AAMA will continue to promote appropriate tax credit incentives for the future.
It is also timely to honor the work and life of innovative thinker, Steve Jobs, the late Apple co-founder, who committed his life to making an impact on the technological world and society at large. He constantly encouraged others to think outside the box and master their message, both at work and home.
“Stay foolish, stay hungry” is a well-known phrase that Mr. Jobs communicated during his famous 2005 commencement speech at Stanford, as described in a Washington Post article, and a message that we should all keep in mind. Steve Jobs had a profound influence on millions of people. It is with deep regret that we lost such an influential man. As we give consideration to our lives, let Steve Jobs inspire all of us to deliberate how we can live our lives more fully, think differently and carry out our own dreams and jobs with more commitment, creativity and passion, then he will continue to influence millions more to change the world as he did.