In August 2022, President Biden signed the so-called “Inflation Reduction Act,” a $370 billion spending package that will do little to reduce inflation, but it will do a lot to subsidize solar power production. Unfortunately, these subsidies will lead to market distortions that will increase the cost of electricity for Mississippi families and businesses.
The biggest problem with subsidies is that they incentivize rational actors to do irrational things.
In this case, the Inflation Reduction Act provides a 30 percent Investment Tax Credit (ITC) for solar that will incentivize Magnolia State electric companies to build facilities that otherwise would not make sense from a business standpoint.
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