In a little remarked upon move earlier this month, Sen. Max Baucus (D-Mont.) put forward a legislative proposal to raise taxes on energy companies by stripping them of the ability to claim a key tax deduction.

Known as Section 199 relief, the deduction in question has been available to companies engaged in energy production, as well as manufacturing, for several years as an incentive to encourage operations and employment.

However, under an amendment introduced by Baucus, which could be voted on in the Senate next month, that deduction would be eliminated for certain players in the energy industry.

According to a memo obtained by Capitol Confidential and written by Senate Finance Committee staffers Scott Mulhauser and Erin Shields, the Baucus amendment is intended as a substitute to another introduced by Sen. Mike Johanns (R-Neb.).  The Johanns amendment is itself intended to modify the Small Business Jobs Act.

The memo states that “the Democratic alternative… would repeal Section 199 of the tax code, which currently allows these corporations to deduct six percent of their income from oil and gas production from their tax liability, effective December 31, 2010.”

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On May 27, President Obama remarked to an audience gathered at Nellis Air Force Base in Nevada that Americans, “pioneered solar technology, but we’ve fallen behind countries like Germany and Japan in generating it, even though they get less sun than we do.  They certainly get less sun than Nevada.”  Today, Vice President Biden and a handful of Cabinet secretaries releases the Recovery through Retrofit report that will extol the virtues of green jobs and energy savings to be had if only the government had its way.

Observers of national policy may want to look at other countries’ experiences to see how they have fared with efforts to improve environmental policies.  Previous research on green jobs policies in Spain showed that costs were high and benefits short-lived.  But what of the President’s example of Germany?

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