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Republican Tax Plan Kills Electric Vehicle Credit (arstechnica.com)
An anonymous reader quotes a report from Ars Technica: The nascent market for electric cars will suffer a big setback if the Republican tax plan released on Thursday enters into law. Among the changes to the current tax code would be an end to the Plug-In Electric Drive Vehicle Credit. That's the tax incentive that currently means up to $7,500 back from the IRS when you purchase a new battery or plug-in hybrid electric vehicle. Since the start of 2010, the EV tax credit has been $2,500 for a plug-in vehicle with at least 5kWh battery capacity. Every extra kWh nets another $417 up to a maximum of $7,500, although you would need at least that amount in income tax liability -- the IRS won't cut you a check to make up the full amount. It was never meant to be permanent; once an automaker sells 200,000 qualifying vehicles (starting from January 1, 2010) its eligibility is phased out over a matter of months. But in the almost seven years since, no one has reached that limit yet. Tesla will almost certainly be first, with General Motors not far behind; between them, they've sold a lot of Model Ses and Chevrolet Volts. If this tax plan is enacted, it will surely mean pain for both companies, as well as anyone else hoping to sell a lot of EVs here in the U.S. The data is pretty clear -- tax incentives sell electric cars, and the market for EVs can dry up very fast when they're abolished, as Georgia's recent experience shows.
It's interesting that Tesla cars are currently the most "American-made" of any of the American car manufacturers, and these tax credits helped drive Tesla's success. Guess Trump's "Buy American" mantra only applies to subsidies to coal miners.
Considering the high cost of these vehicles (especially Teslas), the effect of the current subsidy system is to transfer tax dollars to the already well-off. There are no middle or low-income families that drive these vehicles, only upper-class. And especially with the Teslas, these vehicles are not only a form of transportation, but also status symbols.
(Full disclosure: I got about $2000 when I bought a Prius back in 2005 or so. Perhaps I'm a hypocrite, but the subsidy made a bit more sense for Priuses as they helped close the gap in price between them and equivalent cars, like a Civic or Camry or Taurus. But subsidizing $75,000 cars for the upper class makes no sense)
many will decry the evils of government intervention into the market for cars, and celebrate the end of this program.
The same people will have zero problems with the direct subsidies that distort the petroleum and agricultural markets, each of which massively dwarf this program.
Pretty much the entire Republican plan consists of ways of giving the middle finger to Californians — removing the EV tax credit, removing the deductibility of income tax, etc. If you look at it from that perspective, it all makes sense. Basically, they're trying to shift California from blue to deep blue.
Check out my sci-fi/humor trilogy at PatriotsBooks.
As others have said, the credit disproportionately benefits people who (1) are in higher tax brackets (wealthy people), and (2) those who can afford electric vehicles (also wealthy people).
What we should be doing instead is to charge the full societal cost of gasoline consumption (up to $1,000 per person per year) and adding that to the price of gasoline. Then people will naturally switch to electric vehicles, no subsidies or government social engineering necessary.
Of course, we also need to charge drivers the full cost of the roads, up from less than half (who says Republicans oppose welfare?); and abolish laws that show favoritism toward Big Oil such as those that force developers to build more parking than the market wants, but that's a different topic of discussion.
Any sufficiently unpopular but cohesive argument is indistinguishable from trolling.
Contrary to what the summary implies, it's not a $7500 check from the IRS. It's a tax credit. You have to owe at least $7500 in taxes in order to take full advantage of the $7500 tax credit. If you owe less, you don't get the full credit.
Looking at the IRS tax stats for 2015, column U (average total income tax paid), the $50k-$75k bracket paid an average of $5341 in income tax, the $75k-$100k bracket paid an average of $8430 in income tax. So you had to have an income of about $75k+ to claim the full $7500 tax credit. Not exactly upper class, but definitely upper middle class. Looking at the number of returns in each income bracket, pretty much only the top 25% of incomes qualified for the full $7500.
People in the bottom 75% usually got less than $7500 even if they bought a qualifying EV. And low-income people who typically pay little to no income tax, even if they somehow managed to buy an EV (a lease would qualify you for the credit) got next to nothing. I'm actually not sure how this $7500 tax credit lasted this long. Conservatives should've hated it because it was a massive government subsidy. Liberals should've hated it because it was horribly regressive.
Perhaps we shouldn't be subsidizing state initiatives paid by state income taxes by forfeiting federal dollars?
If you live in a state that has a high income tax because the state government thinks things like 'We'll build our own fucking rockets to launch satillites'
Why should your burden of federal support be passed onto everyone else who does not live in that state? It is, after all, only fair since you choose to live in that state.
If that makes states with high tax rates unappealing...well...there ya go.
"...whenever any Form of Government becomes destructive...it is the Right of the People to alter or to abolish it..."
Why should citizen X in state A pay less in federal taxes than citizen Y in state B if they make the same? If state A wants state initiatives that is their business but having state income tax a deductible is unfair to the rest of the citizens in other states making the same.
It isn't about who receives more federal dollars it's about what is fair in paying those federal dollars, do you want to argue entitlements or taxes? Because many of those in those red states would want to get rid of those entitlements.
In most civilized countries you simply received a letter at the end of the year informing you of what you owe on your taxes and you pay it online. The IRS intentionally makes filing your taxes hard and complicated so they can come to your house and take everything you own at a whim.