BACKGROUND:
The Internal Revenue Code is filled with tax incentives for various industries. The incentives come in various forms and can be in the form of credits against taxes, accelerated deductions, favorable income treatment and others. Some Examples include the following:

ENERGY INDUSTRY:

• Credit for producing fuel from a nonconventional source (section 29)
  
• Credit for qualified electric vehicles (section 30)
  
• Credit for certain uses of gasoline and special fuels (section 34)
  
• Enhanced oil recovery credit (section 43)
  

WIND INDUSTRY:

• Credit for electricity produced from certain renewable resources (section 45)
  

TIMBER INDUSTRY:

• Reforestation Credit (section 48(b))
  

REAL ESTATE INDUSTRY:

• Rehabilitation Credit (section 47)
  
• Low-income Housing Credit (section 42)
  

BANKS, INSURANCE COMPANIES:

• Separate Set of Tax Rules Apply (Sections 581-597; 801-848)
  

WAGE-BASED TAX INCENTIVES ALREADY EXISTING IN TAX CODE:

A number of wage-based tax incentives already exist in the tax code. These include the following:

• Work Opportunity Tax Credit--40% credit on first $6,000 for employees of targeted groups (e.g., veterans, qualified summer youth employee). (section 51)
  
• Empowerment Zone Employment Credit--20% credit on first $15,000 of wages paid for services performed in a designated empowerment zone. (section 1396)
  
• District of Columbia Employment Credit--Same as Empowerment Zone Employment Credit. (section 1400)
  
• Indian Employment Credit--20% of first $20,000 of qualified wages and health insurance costs for member of Indian tribe for services performed on an Indian reservation. (section 45A)
  
• Research and Development Tax Credit--20% of qualified research expenses (which includes wages for qualified services). (Section 41)
  
• Welfare-to-Work Credit--35% of qualified first year wages plus 50% of qualified second-year wages up to first $10,000 of wages. (section 51A)