I love that expression. There are lots of explanations of the saying, but I take it to mean (and I assume most do) that it is meant to describe a big talker – one who says a lot but doesn’t really have/do much to back it up.
As the dust has begun to settle from the Inflation Reduction Act (I always laugh at that title), that saying keeps going through my head.
There are a lot of things in the IRA that are HVAC related and one of them was the extension and expansion of 25C Tax Credits. Before I go any further, a short primer on tax credits.
To receive this tax credit (to be technical, it is called a Non-Refundable Tax Credit) you have to actually owe taxes. If you receive money back from the government, you don’t get to add money back. So, basically, it is a deduction from taxes owed. Only.
I did a quick bit of research and was shocked to find that 75% of American tax filers receive money back after they file their taxes. I also had no clue that many Americans use their taxes as a sort of “savings account”. I always attempt to straddle the line of zero because hey, its my money, and I feel that I can do better than the government using it over that certain period of time between when I earn it and when I file my taxes. But hey, that’s just me.
Anyways, the extension/expansion of the 25C tax credits for improving the efficiency of your homes HVAC equipment won’t affect at least 75% of the population of the USA. On top of this, when you figure in the people who don’t pay taxes at all since they are in lower income brackets, that has to push the number well over 80%. You wouldn’t believe the amount of press in my industry that the 25C issue is getting. Already you can see what is going on with the major players here, here, here, here, and here, just to show you a few.
What is more is that they just came out with the minimum equipment standards to be eligible for the 25C credits. While you would get a max $2000 tax credit for a heat pump installation, the cost of that installed system in most residences, at my best guess, would be upwards of ten to fifteen thousand dollars, maybe more. I have to guess at this point because the major manufacturer that I represent doesn’t even have a qualifying piece of equipment available for this incentive (supposedly 1q 2023). I haven’t looked at competitors, but assume they are in the same boat.
To say that I’m unimpressed by the 25C stuff would be an understatement. Eliminating 80% of the market off the top doesn’t exactly make me spring out of bed in the morning especially when I am at war with all of my competitors all day anyways. We will make our contractors aware of these credits and some may use it, but in general, it will just all go away I’m sure. Add to this the coming recession and entry level will be where the winners play, at least in my opinion, in 2023.
There is much more in the IRA to talk about that is HVAC related, but I think I will save some of that for another time.
One wonders how many of the “elected” “representatives” who “voted” for that monstrosity were even aware of Section 25C?
To quote President Reagan — This is no way to run a railroad.
I believe you are misinterpreting “taxes owed.” To get the full credit one must owe the government at least the amount of the credit. If I owe $2,000 in taxes when taxes are computed, I get the full credit, regardless of how much money was withheld from me. Withholdings are not the same as tax, that is why there are refunds.
Jon you are correct. My wording may have been confusing/poor but that is what I was trying to get across.
Here’s some data on how many people pay how much in taxes:
https://taxfoundation.org/summary-of-the-latest-federal-income-tax-data-2020-update/
Based on the data David Foster posted, a household making $42,000 pays on average 8% in federal tax, or $3,360. They would get the full credit. They would also be hard pressed to afford a house in many parts of the country. Unless they inherited the house, they are not in the market for a heat pump anyway.
That most tax credits are not really useful unless one is in the top 25% is neither new nor a surprise. EV tax credits, solar installations, home charging stations … all of these imply a degree of wealth that only the top 25% of households have. Subsidizing the well-to-do is a long federal government tradition …
A long time ago when I was hiring from the lower reaches of the labor pool, I was asked by the state employment commission if I would consider hiring parolees and people on probation. After consideration, I said sure, they couldn’t be that much worse then what I was already dealing with. My contact at the commission then explained the process by which a government program would reimburse me for about half the first six months wages in consideration of the training I’d be providing.
This process would have required me to first hire them but not let them start work until their eligibility had been confirmed. This, they told me would take a couple of weeks at least. That’s two weeks for somebody that was already having trouble eating regularly before they could get a pay check and It hardly suited me. I had jobs to do now, not weeks from now.
In the end, I hired them anyway and just forgot about any government handouts. I’d like, especially considering the season, to relate some sort of Hallmark worthy tale of redemption, but all the guys I know about but one eventually landed back in some sort of “carceral” situation. Not while they were working for me, but eventually. The one that was still out had committed a murder in California, been paroled to Texas where he did another during a robbery and was out again, all before he was thirty. This was back in the ’80’s, the last time we tried to control crime with compassion.
I assume the the reasoning behind the federal program was the same as mine. An ex-con with a job was more likely to stay out then one without. In the years since, I’ve often wondered if this was just an example of remarkable stupidity or if there wasn’t someone that needed it to be structured in that way for their profit.
David Foster,
Curious about another govt stat.
Back during the Obama admin, they estimated that government spending on anti-poverty programs (specifically labelled as such) would soon be over 25,000 for every person living in a household below the poverty line (as ridiculous a stat that is).
The current number is hard to find. I wonder what it is now after all the government spending of the last few years. Anyone know where it could be found?