Economic and Security and Recovery Act of 2001

Legislation

By: United States Congress

Date: 2001

Source: U.S. Congress. Economic Security and Recovery Act of 2001, as amended.. Washington, DC: 2001. Available online at Library of Congress. 〈http://thomas.loc.gov/cgi-bin/cpquery/?&dbname=cp107&sid=cp107GyS4i&refer=&r_n=hr367.107&item=&sel=TOC_127897〉 (accessed March 10, 2006).

About the Author: The Congress of the United States was established by Article 1 of the U.S. Constitution of 1787. It is the legislative arm of the U.S. Federal Government.

INTRODUCTION

In the wake of the September 11, 2001 terrorist attacks, many Americans were deeply fearful that the U.S. economy might plunge into recession. In order to stimulate the economy, Congress introduced the Economic Security and Recovery Act of 2001. This piece of legislation, introduced exactly one month after the attacks, was intended to provide tax incentives for economic recovery. The legislation covered diverse topics including capital gains on stock sales, credits for people leaving welfare, and tariffs on imported liquor. The motivation for the act was relatively simple: facing a situation in which fear and uncertainty might lead Americans to reduce spending (which would slow the economy), the act offered a wide array of incentives and tax cuts to encourage spending.

The environmental impact of the legislation was seen as largely positive, with several aspects of the bill helping environmental causes. Among the items praised by environmentalists was an extension on tax breaks for individuals or organizations purchasing clean-fuel vehicles that burn natural gas, hydrogen, or ethanol mixtures. Whereas the credit was originally scheduled to be phased out beginning in 2001, the act postponed this phase-out for two years. Similar extensions were offered on tax credits for individuals installing clean fuel refueling equipment. Other provisions of the act extended credits for electric vehicles and for electricity produced from renewable sources.

Following several months of debate in and between the House and Senate, the bill was eventually signed into law in March, 2002 under the title "Job Creation and Worker Assistance Act of 2002." In reading the actual text of the act, it appears to be little more than a series of phrases or short sentences strung together with headings. In most cases, when the bill states to "strike" one date and insert another, it is authorizing the extension of a cutoff date or deadline. For example, the date extensions for qualified electric vehicles means that tax credits for buyers of electric cars would be offered for two additional years before expiring.

PRIMARY SOURCE

SEC. 602. CREDIT FOR QUALIFIED ELECTRIC VEHICLES

(a) IN GENERAL—Section 30 is amended—

(1) in subsection (b)(2)—

(A) by striking 'December 31, 2001,' and inserting'December 31, 2003,' and

(B) in subparagraphs (A),(B), and (C), by striking'2002', '2003', and '2004', respectively, and inserting '2004', '2005', and '2006', respectively, and

(2) in subsection (e), by striking 'December 31, 2004' and inserting 'December 31, 2006'.

(b) CONFORMING AMENDMENTS—

(1) Subparagraph (C) of section 280F(a)(1) is amended by adding at the end the following new clause: '(iii) APPLICATION OF SUBPARAGRAPH.—This subparagraph shall apply to property placed in service after August 5, 1997, and before January 1, 2007.'

(2) Subsection (b) of section 971 of the Taxpayer Relief Act of 1997 «NOTE: 26 USC 280F note.» is amended by striking 'and before January 1, 2005.'

(c) EFFECTIVE DATE—The amendments made by this section shall apply to property placed in service after December 31, 2001.

SEC. 603. CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE RESOURCES.

(a) IN GENERAL—Subparagraphs (A), (B), and (C) of section 45(c)(3) are both amended by striking '2002' and inserting '2004'.

(b) EFFECTIVE DATE—The amendments made by subsection (a) shall apply to facilities placed in service after December 31, 2001.

SEC. 606. DEDUCTION FOR CLEAN-FUEL VEHICLES AND CERTAIN REFUELING PROPERTY.

(a) IN GENERAL—Section 179A is amended—

(1) in subsection (b)(1)(B)—

(A) by striking 'December 31, 2001,' and inserting 'December 31, 2003,', and

(B) in clauses (i), (ii), and (iii), by striking '2002', '2003', and '2004', respectively, and inserting '2004', '2005', and '2006', respectively, and

(2) in subsection (f), by striking 'December 31, 2004' and inserting 'December 31, 2006'.

(b) EFFECTIVE DATE—The amendments made by subsection (a) shall apply to property placed in service after December 31, 2001.

SIGNIFICANCE

While a simple two-year extension of these energy tax incentives might not appear significant, short-term extensions are often the only way to keep such tax breaks alive, since lawmakers are often far more willing to support tax changes with a set ending date. In some cases, tax provisions remain part of U.S. law for many years, kept alive only by a series of short-term reauthorizations.

As often happens, the extensions authorized in the Economic Security Act were adequate to keep these tax breaks on the books until new extensions could be passed. On August 8, 2005, President Bush signed into law the Energy Policy Act of 2005, which included tax credits of up to $3,400 for buyers of hybrid gas-electric vehicles. The new law also provided new credits for producers of biodiesel and ethanol fuels, as well as a 30 percent tax credit for organizations installing clean-fuel refueling equipment, such as E85 fuel pumps.

FURTHER RESOURCES

Books

Bechtold, Richard L. Alternative Fuels Guidebook: Properties, Storage, Dispensing, and Vehicle Facility Modifications. New York: SAE International, 1997.

Tickell, Joshua, et al. From the Fryer to the Fuel Tank: The Complete Guide to Using Vegetable Oil as an Alternative Fuel. Tallahassee, Florida: Tickell Energy Consulting, 2000.

U.S. Government. 21st Century Ethanol and Renewable Fuels Digest. Washington, DC: Progressive Management, 2005.

Web sites

Uncle Fed's Tax Board. "Job Creation and Worker Assistance Act of 2002." 〈http://www.unclefed.com/TaxHelpArchives/legislation/hr3090.html〉 (accessed January 26, 2006).

U.S. Department of Energy. "The Energy Policy Act of 2005." 〈http://www.energy.gov/taxbreaks.htm〉 (accessed January 26, 2006).

U.S. House of Representatives. "Technical Explanation of the 'Job Creation and Worker Assistance Act of 2002.'" 〈http://www.house.gov/jct/x-12-02.pdf〉 (accessed January 26, 2006).