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1 1 (August 5, 2022)

handle is hein.crs/goveibz0001 and id is 1 raw text is: Congressional ____ ~ ~Research Service Proposed Tax Preference for Domestic Content in Energy Infrastructure August 5, 2022 The Inflation Reduction Act of 2022 (IRA), now pending in Congress, would substantially revise numerous tax credits designed to support investment in energy infrastructure. Companies building wind farms, geothermal power generation, and a range of other energy-related projects could receive an additional, or bonus, tax credit if the project incorporates domestically sourced iron, steel, and manufactured components. This would mark an expansion of domestic preference policies, which currently apply to various forms of federal financial assistance but are not a part of any tax preferences. Overview of Domestic Preference Requirements Federal domestic preference laws seek to support U.S. manufacturing by requiring use of U.S.-made products in certain situations. The Buy American Act, the Berry Amendment, and several other laws require that some goods purchased directly by the federal government be manufactured domestically. Separately, several statutes and regulations collectively known as Buy America require that states, municipalities, and other recipients of federal grants for transportation and infrastructure ensure that domestic goods are used in their projects. Buy America covers public works such as highways, transit lines, and water and sewage construction; it also requires, for example, that passenger rail cars purchased by Amtrak be assembled in the United States. The Infrastructure Investment and Jobs Act (IIJA; P.L. 117-58), enacted November 15, 2021, expanded Buy America coverage to other types of infrastructure projects funded by federal grants, such as electric power transmission facilities and broadband infrastructure. The law also broadened the types of manufactured goods covered by Buy America to include nonferrous metals, such as copper used in electric wiring; plastic- and polymer-based products; glass, including optical fiber; and construction materials, such as lumber and drywall. To be considered produced in the United States under the IIJA, manufactured goods other than iron and steel must contain greater than 55% domestic content. These various laws, as well as laws requiring domestic production of military goods, all involve procurement funded directly or indirectly by federal money. The domestic preference provisions in the IRA, in contrast, would apply to entities claiming federal tax credits, creating an incentive for use of domestic manufactured goods rather than a requirement. Congressional Research Service https://crsreports.congress.gov IN11983 CRS INSIGHT Prepared for Members and Committees of Congress

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