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> The ITC is a tax credit, which means only households with a large tax bill will be able to benefit Can you explain your working here? Pretty much every home

> The ITC is a tax credit, which means only households with a large tax bill will be able to benefit Can you explain your working here? Pretty much every home owning household is going to pay $10k of taxes, say.

crabmusket 3y ago
That's a fair point, I hadn't run the numbers on that. It being a significant problem was just based on having read articles on the US market over the last 5-8 years and not an in-depth analysis, so I can't cite any of them in particular.
tsjackson 3y ago
10k is a reasonable guess for how much tax liability is needed, and it's not a huge issue, but it is an issue. Retirees and lower-middle income folks often pay less than that each year, as do folks with even lower incomes who inherited their homes.
tzs 3y ago
> Pretty much every home owning household is going to pay $10k of taxes, say. I'm not so sure. According to this [1] the median income of homebuyers in mid 2023 was $107 000, up from $88 000 the year before. I assume the median income of homeowners is less than that of homebuyers, so I'll be conservative and take $107k as the median homeowner income. As a sanity check, this seems reasonably in line with older data [2]. Let's assume their income is all ordinary income as opposed to capital gains that might be taxed at a lower rate, and assume they are mostly families that file jointly, and assume they have no deductions other than the standard deduction. The 2023 standard deduction for married filing jointly is $27 700, leaving our median homeowner family with $79 300 taxable income. That puts them in the [$22 000, $89 450) bracket, where the tax is $2 200 + 12% of the amount over $22 000. That comes to $9 076. That would be median so there should be a lot of people below that. [1] https://www.investopedia.com/typical-income-to-buy-home-surged-to-usd107-000-last-year-8401169 https://www.investopedia.com/typical-income-to-buy-home-surg... [2] https://www.statista.com/statistics/974721/median-income-homeowners-usa/ https://www.statista.com/statistics/974721/median-income-hom...
- deleted 3y ago
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- theptip 3y ago
  Thanks for doing the calculations here, very helpful. I do agree that tax rebates are less preferable to at-purchase rebates, though I wonder if there is an “ease of implementation” accounting difference for the government that isn’t obvious. Eg securing funding to pay out a cash rebate has a budget effect different than reducing tax collection. More generally though, solar (and energy efficiency in general) has an interesting principal/agent problem - households in the bottom quartile or even half are not likely to have cash lying around to invest in 10-year ROI projects. So these efficiency gains often don’t get harvested. Solar financing is an option for these cases but it has its own implementation problems. The situation for renters is even worse; I’m sure that fixing the drafty windows in my apartment would pay off in 5 years, but it’s unlikely I’ll be here long enough to harvest that win, and there is no financial product that lets the landlord and me to coordinate on this.
midasuni 3y ago
In the U.K. there are massive grants for home owners who don’t have a reasonable income. It’s ageism - more money flowing from young workers (who pay the highest taxes) to old owners (who pay the lowest) The generation that can benefit are “Generation Me”, they’ve spent their entire lives having society warp around them and don’t even realise it.
ianai 3y ago
People make the best decisions when the benefits are up front, not delayed to a yearly tax filing with a probability of distribution dependent upon income.

crabmusket 3y ago

That's a fair point, I hadn't run the numbers on that. It being a significant problem was just based on having read articles on the US market over the last 5-8 years and not an in-depth analysis, so I can't cite any of them in particular.

tsjackson 3y ago

10k is a reasonable guess for how much tax liability is needed, and it's not a huge issue, but it is an issue. Retirees and lower-middle income folks often pay less than that each year, as do folks with even lower incomes who inherited their homes.

tzs 3y ago

> Pretty much every home owning household is going to pay $10k of taxes, say. I'm not so sure. According to this [1] the median income of homebuyers in mid 2023 was $107 000, up from $88 000 the year before. I assume the median income of homeowners is less than that of homebuyers, so I'll be conservative and take $107k as the median homeowner income. As a sanity check, this seems reasonably in line with older data [2]. Let's assume their income is all ordinary income as opposed to capital gains that might be taxed at a lower rate, and assume they are mostly families that file jointly, and assume they have no deductions other than the standard deduction. The 2023 standard deduction for married filing jointly is $27 700, leaving our median homeowner family with $79 300 taxable income. That puts them in the [$22 000, $89 450) bracket, where the tax is $2 200 + 12% of the amount over $22 000. That comes to $9 076. That would be median so there should be a lot of people below that. [1] https://www.investopedia.com/typical-income-to-buy-home-surged-to-usd107-000-last-year-8401169 https://www.investopedia.com/typical-income-to-buy-home-surg... [2] https://www.statista.com/statistics/974721/median-income-homeowners-usa/ https://www.statista.com/statistics/974721/median-income-hom...

deleted 3y ago
[deleted]
theptip 3y ago
Thanks for doing the calculations here, very helpful. I do agree that tax rebates are less preferable to at-purchase rebates, though I wonder if there is an “ease of implementation” accounting difference for the government that isn’t obvious. Eg securing funding to pay out a cash rebate has a budget effect different than reducing tax collection. More generally though, solar (and energy efficiency in general) has an interesting principal/agent problem - households in the bottom quartile or even half are not likely to have cash lying around to invest in 10-year ROI projects. So these efficiency gains often don’t get harvested. Solar financing is an option for these cases but it has its own implementation problems. The situation for renters is even worse; I’m sure that fixing the drafty windows in my apartment would pay off in 5 years, but it’s unlikely I’ll be here long enough to harvest that win, and there is no financial product that lets the landlord and me to coordinate on this.

midasuni 3y ago

In the U.K. there are massive grants for home owners who don’t have a reasonable income. It’s ageism - more money flowing from young workers (who pay the highest taxes) to old owners (who pay the lowest) The generation that can benefit are “Generation Me”, they’ve spent their entire lives having society warp around them and don’t even realise it.

ianai 3y ago

People make the best decisions when the benefits are up front, not delayed to a yearly tax filing with a probability of distribution dependent upon income.