Tyson's Take
by Tyson Schwartz
November 1st, 2010

Updates on the Energy Tax Credit Extension

There are a couple of tax credit bills in Congress, and I wanted to give you updates on both of them. First, the Home Star bill has been talked about for many months. The bill has many moving parts to it, but as of today, it doesn’t look like Home Star has the votes to pass. Even with a ‘lame duck’ Congress coming back in November, the votes just don’t seem to be there. But this is Washington D.C. I am talking about, so things could certainly change in a hurry, especially if lawmakers that return to Congress in November are not re-elected. They essentialy don’t have anything to lose so we will monitor this closely.

It should be pointed out that many of us in the industry don’t like the way the Home Star bill is in current form anyway. One of the main obstacles is the way the homeowner rebates are handled. If a homeowner qualifies for $5,000 in energy rebates, the dealer is responsible for reimbursing that money to the homeowner. The dealer would then fill out the required forms to get reimbursed from the government. This would obviously put a severe crimp in cash flow, and it would be my opinion, that many small businesses and small window manufacturers could go out of business as a result. However, there are easy fixes to make this a workable bill. It’s just a matter of speaking to lawmakers and making our voices heard.

Second, there has been some talk about extending the current tax credit. However, with any of these bills, it appears there has been some modification to the bills. Sen. Olympia Snowe and Sen. Jeff Bingaman have proposed a bipartisan bill. In this proposed bill, specifically with replacement windows, if a homeowner purchases ENERGY STAR qualified windows, the homeowner would be eligible for a $200 rebate. If they purchase R-5 approved windows, their rebate goes up to $1,000.

There are pros and cons to the above bill. But from my perspective, I see more negatives here. It would seem to me that the easiest and simplest thing to do would be to extend the current tax credit in its current form for one or two years. The industry is getting back on its feet, but we still have some ‘walking’ to do.

From talking to various dealers around the country, it appears that the fourth quarter is stronger than last year’s fourth quarter. It tells me momentum is building. However, it’s important to keep our expectations in line. We may be buying business from the first quarter because the tax credit expiring. But from most of the forecasts I have seen, things look bright for 2011.

Great Selling!

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