Wednesday, December 20, 2006

New Windows, or tax credits and incentives on behavior

Who says tax policy does not provide incentives or disencentives to action.

Thanks to The Energy Policy Act of 2005, I will receive a tax credit for upgrading the windows of my house this year.

The existing windows were original to the house or very close to it - aluminum frame single pane that leached heat like a sieve, complete with winter condensation and frost buildup. Clearly a waste of energy.

Thanks to the Energy Policy Act, I'm going to get a nice $200 tax credit for replacement of the windows, as the credit is for $200 or 10%, whichever is less, and in this case the $200 was definetly less. Regardless, its certainly a nice benefit that certainly encouraged me to spend the money now to get the upgrade, and as a result not only do I get a $200 credit, but I also get the savings from lower energy costs and consumption (which is the point of the Act after all), and the house looks a lot better.

An unanticipated benefit of this Act is because my A/C decided to die off this year, during the hottest part of the summer, I'm going to get a credit on its replacement. The A/C unit was apparently 17 years old and decided it had worked long enough. I replaced it and voila, not only do I garner the efficiency of newer cooling technoogy and lower power consumption, but also a tax credit.

The Act certainly helps incentivize people (at least in my case) to make their homes more energy efficient, which is a good thing, and if people can save on their taxes while doing so - even better!

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