Fenestration Industry Seeks Better Tax Incentives

[hausdok]

Nov 30, 2011/Schaumburg, Ill.

The American Architectural Manufacturers Association (AAMA) is recommending timely and significant government intervention to reduce severe construction industry unemployment. The association recently sent a letter to Chairman Dave Camp and members of the U.S. House of Representatives' Committee on Ways and Means asking for effective tax incentives relating to energy-efficient fenestration products for homeowners.

"AAMA members represent 143,000 employees whose jobs are based solely on the strength of the home construction and renovation industries. The sharp decline and resulting layoffs in home construction brought about by the collapse of the housing market and subsequent economic recession continue to plague the construction industry at every level. The 2009-2010 Nonbusiness Energy Property 25© tax credit, which offered homeowners a 30% tax credit (up to $1,500), provided a boost in the sales of energy-efficient windows and doors and helped to sustain jobs in production facilities and residential construction," says AAMA President and CEO Rich Walker.

Current legislation, however, has reduced the lifetime tax credit to 10% (up to $500) for energy-efficient residential products, purchased and placed in service during 2011. "This severe reduction has led to a debilitating decrease in demand and has decimated the construction industry from production facilities to retailers to product installers," continues Walker.

"Even in a severely recessed economy, homeowners will purchase products to reduce their energy bills given the proper incentive," Walker states. According to 2009 IRS Data Line Counts (released in October 2011), 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.

Residential buildings are responsible for 21% of all energy consumption in the U.S., according to the U.S. Department of Energy's (DOE's) Building Technology Program. Based on ENERGY STAR? program estimates, the investments made by homeowners to purchase and install efficient fenestration products in 2009 will reduce energy costs by an average of $295 annually per household, resulting in a collective savings exceeding $678 million per year for U.S. homeowners who participated in the program.

Walker expresses disappointment saying, "While the 30% tax credit generated a needed sales boost to some of our manufacturer members and their suppliers, many of our members were unable to overcome the enormous drop-off in demand, spurred by the implosion of the housing market and then by the persistent recession that shows no end in sight."

He adds, "Congress continues to provide billions of dollars in funding incentives to support alternative energy-generating projects through the DOE's Loan Program Office. 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 a preventable waste of resources that can be remedied with American-made products already on the market." A vast array of high-performance residential windows, doors and skylights are available to increase the energy efficiency of the U.S. housing stock.

"If reinstated, the 30%/$1,500 Nonbusiness Energy Property tax credit," Walker predicts, "will spur an immediate increase in employment throughout the construction industry supply and installation chain. Our reliance on foreign oil will abate as highly-efficient windows and doors go to work conserving energy. These efforts not only help to conserve national and global resources, they help spark our domestic manufacturing and fiscal health; enhance home values and provide homeowners and their families with more comfortable, better-performing residences."

More information about AAMA's communication with policymakers can be found on its website at www.aamanet.org.

[Jim Baird]

Thanks for posting Mike.

I did not know about this one, but do think that subsidies for energy efficiency upgrades are the right direction to go in.

[kurt]

It is interesting, but it's flavored with inaccuracy.

Wasn't it JLC that determined that simple window replacement wasn't necessarily all that effective for reducing energy costs?

The reality is there's almost no data to support most of the energy efficiency claims of specific industries.

I have some personal experience in this. I recently spent some time in Omaha at the University of Nebraska Engineering School observing and talking to a couple guys at the forefront of researching the topic. They're under contract with every major manufacturer of equipment (Carrier, Trane, etc.) for determining what works and what doesn't.

Harsh reality is there's no data that's credible. The window guys are just another company looking for government help with darn little to support their arguments.

[Tom Raymond]

Wrong. 'Cash for Caulkers' worked just about as well as 'Cash for Clunkers'. We borrowed against future business by subsidizing people who didn't need subsidies. It's no wonder we have such little business now. In 2006 when the incentive was $500, people were clamoring to qualify. No need to give away the farm.

We need to stop thinking so short term. A small incentive that is open to all would do far more than the flash in a pan program we had last year. The current $500 is enough, but it needs to be an annual cap not a lifetime limit inclusive of previous credits, and it needs to be available on more than just primary residences. Tie the program to GDP or unemployment so that it goes away when the economy is healthy, it'll never get better if we're all on welfare.

[kurt]

What's wrong? There is data?

There's good data on what doesn't work.

There's little or no data on what does.

[Tom Raymond]

AAMA and their idea that a huge tax credit is gonna fix the industry. It's more of the same crap thinking that got us into this mess in the first place. It's a band aid when what we need is a tourniquet.

Sorry, you posted while I was typing.

[Jim Baird]

"...There's little or no data on what does..."

As Neil Young would say, "It's a field of opportunity."

Without stepping off the cliff into the verboten zone of politics, I think that as long as gubmint subsidizes anything, it might as well subsidize home improvement.

In my days writing housing rehab jobs that were funded by federal block grants I always got in a word to my "clients" about how good it felt to spend federal dollars on fixing people's homes instead of buying bullets and bombs.