Tax Credits

            The US Environmental Tax credit is based on a system where you buy something and you get money back in the form of paying less tax. Federal Tax credits reduce the amount of taxes that must be paid by an individual or corporation in which acts as if part of one’s tax is already pated. For example, if you buy certain ENERGY STAR products you are eligible for Tax Credits. ENERGY STAR is a US certification program in which certain products that reduce a minimum of a certain amount of energy consumed are labeled ENERGY STAR.

The average American citizen pays up to 50% of their income in taxes to the US Government every year! This is one of the reasons to why Americans have many tax evasion files every year. This contributes to the high desires for tax credits. The was a tax credit works is that it reduces tax dollars individually as opposed to tax deductions which essentially lowers tax by a percentage. The use of tax credits will lessen the amount paid when added up.

Certain goods and services are eligible for tax credits. Products that are created in order to reduce carbon emissions resulting in being eco-friendly are subject to tax credits. Acts, on a local basis, are also qualified for tax credits such as composting or recycling.

Because an average American pays so much in taxes, it is highly desirable to save money especially in fiscal times like today. Consumers are in support of this policy because it’s in their best interests to have their taxes reduced. Nobody wants to spend money that can be potentially saved. Environmentalists are also content in that carbon emissions are encouraged to be reduced. The fight against environmental crises such as global warming is a tough one and such policies like the tax credit system is highly appreciated. However, companies that do not encourage eco-friendly practices have a hard time competing with companies that sell products which are eligible for tax credit.  This causes some companies to resent this system.

The advantages of tax credits are that it can reduce carbon emissions, and many citizens do not have to pay as much tax as first anticipated. For example, some double pane windows that are eligible for tax credit can reduce about 980 to 4,545 pounds of CO2. Some disadvantages would be that the government receives less money and people will eventually buy products just to receive the tax credits instead of the intended effect.

For some Energy Star Products Tax credits are available at 30% of the cost, up to $1,500 total, in principal residences. In some areas like North Carolina, people can receive tax credits on purchasing recycling equipment on a local basis.

Diana Eng and Ashley Hernandez