Solar tariffs + tax credit = illogical?

[Will Prowse]

Let me get this straight. We have tax credits which are a subsidy for solar equipment installs (which companies use to tack on financing charges and ridiculous commissions).

And at the same time, we have tariffs on all solar equipment. Batteries, solar panels and inverters. Passed by Biden and Trump. To supposedly "protect" our solar industry (which in America, is also owned by China).

And then we have to pay to enforce all of this. So irs agents to issue tax credit, customs officers and infrastructure for the tariffs.

What's the net effect here? Looks like increased costs for everyone.

Having a tax and subsidy applied to a single class of products, does not seem logical. Then paying to enforce both sides. What am I missing?

 

[Will Prowse]

Tax credit is 30%

Battery tariffs 32.5% +3.4%

Solar panel tariffs 30-1000% depending on country

Chinese made inverter tariff 34%

How is this logical?

 

[SkyBlue]

You're right. It makes no sense at all. That's why congress and the administration are getting rid of the tax credits. Come next January 1 we will only have the tariffs (taxes) on solar equipment, with no credit for buying and installing it. And no more contradictory government policy. Problem solved.

 

[Will Prowse]

You're right. It makes no sense at all. That's why congress and the administration are getting rid of the tax credits. Come next January 1 we will only have the tariffs (taxes) on solar equipment, with no credit for buying and installing it. And no more contradictory government policy. Problem solved.

What is the purpose of the tariffs? Why did it not "reshore" manufacturing the first time, or the second time, or the third time? What's the utility provided by the tariffs?

 

[CommandoJoe]

"Government is inherently incompetent, and no matter what task it is assigned, it will do it in the most expensive and inefficient way possible."
-Charley Reese

 

[SkyBlue]

What is the purpose of the tariffs? Why did it not reassure manufacturing the first time, or the second time, or the third time? What's the utility provided by the tariffs?

The tariffs that we working people will pay are to provide funding to justify extending tax breaks to corporations and billionaires. Without the tariffs our president's Big Beautiful Bill would increase the national debt by at least $1 trillion more than the $3.8 trillion it is projected to add to the debt now.

 

[cs1234]

What is the purpose of the tariffs? Why did it not reassure manufacturing the first time, or the second time, or the third time? What's the utility provided by the tariffs?

Are there any competing technologies/resources that are not tariffed, or are tariffed less? If so, they might like the tariffs.

For tariffs in general, in lieu of income taxes.. are there those who stand to save more money in income taxes than they pay in tariffs? If so, they might like the tariffs.

 

[Mattb4]

...

Having a tax and subsidy applied to a single class of products, does not seem logical. Then paying to enforce both sides. What am I missing?

You are missing all the nifty campaign contributions, free trips to exotic destinations for Fact finding or paid lectures that no one attends, not to mention high paying make work jobs for your relatives.

Many things are done for competing purposes and are inherently contradictory. Sometimes with the best of intentions (The road to hell is paved with good intentions). So yes we hate products like tobacco, and highly regulate and tax it, at the same time the money coming in from it funds many government programs and subsidies used to be given to tobacco farmers. Some argue the change in 2000 eliminating direct subsidies however has not eliminated indirect.

Best to not worry about it but stand ready to take advantage of any opening.

 

[fatjay]

What is the purpose of the tariffs? Why did it not "reshore" manufacturing the first time, or the second time, or the third time? What's the utility provided by the tariffs?

The government to collect extra tax dollars from you, the consumer, since the tariffs will be passed along to the end user.

 

[cs1234]

The government to collect extra tax dollars from you, the consumer, since the tariffs will be passed along to the end user.

I was told those are paid by the tariffed country. I refuse to pay it.

 

[robbob2112]

I was told those are paid by the tariffed country. I refuse to pay it.

so, you are going to stop buying anything imported

 

[cs1234]

so, you are going to stop buying anything imported

No, I'm just not paying the tariffs. I'll send a bill to the person that told me the tariffed country pays it. Small claims court maybe... imagine the look on the judges face when they tell you to get out of there.

 

[fatjay]

I was told those are paid by the tariffed country. I refuse to pay it.

It's already baked into the price by the time you buy it off the shelf.

 

[cs1234]

It's already baked into the price by the time you buy it off the shelf.

I guess I needed to put a /s on my post. I am very much aware of how the tariffs work. Sometimes my jokes don't land quite right.

 

[chill633]

They do make sense.

Tariffs are supply side and designed to encourage local manufacturing. Local manufacturing needs a healthy market, either domestic or export. If you build it you need someone to sell it to. Specifically, they're designed to raise the price of imported goods (sunk capital) to a level that local goods can compete with (new development).

Tax credits are demand side and designed to foster a local consumption market. Build a healthy market and manufacturers have a some confidence that after sinking lots of money (billions?) into local factories, there will be a market to sell into for them to recover their investment. Modern manufacturing frequently requires large up front capital and can take many years for a return on investment to even break even, much less make a profit. If that market doesn't exists, why manufacture and just import. (See: opportunity cost.)

 

[fatjay]

I guess I needed to put a /s on my post. I am very much aware of how the tariffs work. Sometimes my jokes don't land quite right.

I wasn't sure if you were buying direct from china and meeting them at the docks. In the solar world, that seems entirely possible.

 

[robbob2112]

ha ha -- I got it -- as with most things

 

[chill633]

I wasn't sure if you were buying direct from china and meeting them at the docks. In the solar world, that seems entirely possible.

Hey, the big boys do off-shore oil transfers to bypass restrictions. Rent a fishing trawler and meet the ship off the coast. Have them pass down some panels over the side. Cover them in sea bass and sail to a minor dock somewhere.

 

[jharrell]

having a tax and subsidy applied to a single class of products, does not seem logical. Then paying to enforce both sides. What am I missing?

Why is there tariffs and sales tax and income tax and incentives etc. etc.? These are all different tools the government can use for different purposes, either to raise revenue or promote certain agendas, these are not new tools and the US has a long history of using them as well as many other countries.

The tariffs try and promote domestic production while the tax credits try and promote the solar industry. The credits help with labor costs as well as product costs but has no stipulation about original of materials in current form.

They both could be used in certain ways or together as is here, doesn't mean its the "best" way to do it, but jacking up tariffs and flip flopping on them while removing credit all in short time frame is a recipe for severely damaging or destroying an industry. Businesses need time to adapt and need stable policy they can count on to make decisions.

I agree with @James Showalter, specifically the residential tax credits help individual home owners be on closer footing to corporations who can expense material cost and labor pre tax for solar. By taking away residential tax credits individual homeowners now must pay post tax dollars and are at a disadvantage compared to solar farms, this will push the industry further away from individual ownership.

 

[cs1234]

I wasn't sure if you were buying direct from china and meeting them at the docks. In the solar world, that seems entirely possible.

Whole new side business opportunity for them of sending them to you as a box of grandmas cookies.

 

[fmeili1]

I'm no expert, but history has repeatedly shown that high and broadly based tariffs don't have positive effects. On the contrary, they always lead to higher prices, reduced trade and economic downturns. For this reason, it is no longer commonly used as a tool today.

Time limited, targeted tariffs to achieve specific, localized objectives can sometimes have a positive effect—but that's rather the exception.

Why should this be any different today where we live in a much more globalized world as ever before?

 

[cs1234]

Hey, the big boys do off-shore oil transfers to bypass restrictions. Rent a fishing trawler and meet the ship off the coast. Have them pass down some panels over the side. Cover them in sea bass and sail to a minor dock somewhere.

A lot of boats have batteries and solar panels anyway. They could just sail out with no extra panels and batteries.. pick some up, make them look like they are installed, remove them.. done. You could get a few hundred dollars worth of panels/batteries at a time this way on a small boat.

 

[MrSparkle]

Subsidies are an effective way to chain individuals to the big national wheel.
Chained slaves are more easy to control compared to "free as a bird".

 

[jharrell]

Subsidies are an effective way to chain individuals to the big national wheel.
Chained slaves are more easy to control compared to "free as a bird".

 

[Quattrohead]

By taking away residential tax credits individual homeowners now must pay post tax dollars and are at a disadvantage compared to solar farms, this will push the industry further away from individual ownership.

This 100%