Slashdot Mirror
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.
Lets bring back gasification cars that got us through gas shortages. Go down and buy myself some Grade A West Virginia coal and put all those hard working ditch diggers back to work.
Among the changes to the current tax code would be an end to the Plug-In Electric Drive Vehicle Credit.
I can't say that I disagree. However, I would really like to see an end to agrictulture subsidies. While electric vehicle tax credits will probably have a net long-term impact on the environment, agriculture subsidies just smack of make-work.
Good! The government should not be picking winners and losers...
https://www.treasury.gov/open/Documents/USA%20FFSR%20progress%20report%20to%20G20%202014%20Final.pdf
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)
Tax credit is not what you "get back". Tax credit is just a deduction from your income to get into a lower tax bracket.
No, that's wrong too.
A deduction reduces your taxable income before you calculate taxed owed on that income.
A tax credit is a credit against taxes owed, after you have calculated taxes on your taxable income. The cretit may be refundable (you get all of it) or non-refundable (you get no more than the amount to zero-out your tax liability.)
If it weren't for deadlines, nothing would be late.
I can agree on that when it comes to Tesla's S/X models... but what about the Leaf, Volt, Bolt, and other "cheap" electric vehicles? Those are far from status symbols, and the people that drive them are definitely not upper-class.
Maybe it would make sense to continue to offer subsidies on cars priced below, say $40K, and then scale it down or outright remove it for higher priced vehicles.
Never underestimate the bandwidth of a 747 filled with CD-ROMs.
the effect of the current subsidy system is to transfer tax dollars to the already well-off.
Of all the things wrong with a subsidy, this is the least problematic for the electric vehicle subsidy. By your logic, the people receiving the subsidy are those who actually pay federal income taxes. Remember, the bottom 50% of wage earners have effectively no federal income tax burden. So, this isn't a wealth transfer to the wealthy. At worst, it is a discount on the taxes that they are actually paying.
The real problem I see with subsidies like this is that they tend to artificially raise the price of the product being subsidized. This happens with college tuition, agricultural produce, and even happened with low end fuel-efficient cars during the cash for clunkers program.
The real problem for subsidies is that they create a market distortion. There are certain limited occassions where that sort of thing makes sense and electric cars, even those which only the "well off" can afford might be one of the few good occassions, owing to the potential long term environmental benefit. I would rather the market function well without government interference, but there is still a way to go until electric vehicles become truly cost competitive.
its called Economics.
"His name was James Damore."
The only people who own electric cars are in the Top 10% (usually Top 5%) of US earners. It is ridiculous to have such a credit.
If that's true, then the free market system has failed this particular product category pretty badly, and maybe needs some kind of regulation, or just plain old punishment for price fixing.
But, my guess is that those cars are simply still expensive to make.
Never underestimate the bandwidth of a 747 filled with CD-ROMs.
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.
That's not true at all. The market looks only at the short term.
Oil has a (mostly) fixed (if you look at it charitably - actually it's increasing) cost of production, but it's still the cheapest way to fuel a vehicle, mostly because of the huge capitol cost of a battery.
Batteries meanwhile have a decreasing cost that goes in line with our experience producing them, as technology improves.
By introducing this subsidy we force the industry to push us along the battery experience curve faster. That in turn causes batteries to become the cheaper option faster. There's no question that they will be the cheaper option at some point, this just forces them to become that cheaper option before the market's shortsightedness would normally do so.
Long story short - it's known that batteries will be more viable than oil in the market at some point. The goal here is to get to that point sooner and lower costs for everyone.
Which was exactly the goal - encourage those manufacturers to make electric cars, because it became more profitable. In doing so, encourage research into battery technology, and push us along the experience curve to make batteries cheaper, and more viable both for cars and grid storage.
Electric car manufacturers won't drop the price of the cars. The subsidy only applied to the first few months of production to kick start the market. Both Tesla and GM are almost at the limit already so it doesn't really effect them anyway.
What is important is the liquid fuel tax and lowered subsidy for ethanol. Both of those make internal combustion vehicles more expensive to own. Electric cars will become more attractive even without the subsidy. A win-win for government revenue.
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.
I am very much looking forward to the day that I can economically and conveniently own an electric vehicle. That being said, I think itâ(TM)s time to eliminate the credit. Car manufacturers are certainly including that credit in their manufacturing and cost and profits. Eliminate it and watch EV manufacturers bring the costs down in kind.
Then we should also stop subsidies of fossil fuels ($5.3 trillion a year according to IMF).
https://www.imf.org/en/News/Ar...
It's about time they competed on a level playing field.
Solar and wind (without subsidies) are cheaper than coal and natural gas.
I don't read your sig. Why are you reading mine?
So is the mortgage interest deduction and the whole government backed secondary mortgage market ... depending on your definition of "well-off". Certainly most of the people in the neighborhood I grew up with weren't ever going to benefit from that.
But it was a matter of federal policy that moving people (or at least some people) into homes they owned and having them build equity was good public policy.
The reason electric vehicle subsidies exist isn't to make life nicer for well-heeled consumers; it's to decrease US dependency on foreign oil in the long term. Electricity in the US is produced mainly from domestic sources: natural gas (34% and rising), coal (30% and dropping), nuclear (20%) and renewables (15%).
A policy in the long term of switching to electricity benefits the poor people, not only because the cars will become cheaper and enter the second-hand market, but because it's poor people who largely defend US petroleum sources overseas.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
We don't need a tax credit for electric cars. We need a tax penalty for polluting. Maybe in this case the result is similar but with fewer arbitrary stipulations which benefit specific megacorps who can afford to buy legislation.
Cars kill as many people by air pollution as by collisions--the difference is that air pollution is always a hit and run.
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.
The robber also extinguishes the fire when your house is on fire and tries to save you from the house. The robber comes via the same roads that you use for free every day. The robber also keeps out any unfriendly country that is interested in your land. Etc. Etc. Etc.
That doesn't compare much to the criminal you depicted in your story. Your comparison failed badly. ....
Not completely Covered by FICA payments. Entitlements (SS, SS Disability, Medicare and Medicaid) are only partially funded by the funds paid in by tax payers.
But due to the early years of payments when we had a real pyramid. Many paying, few collecting ( I think it was 16 to 1). But now the end of the surplus is in sight. The last numbers I saw we had 2 paying for each individual collecting.
I think the problem date for SS/Medicare (which are what FICA is) is 2034. The other Entitlements (SS Disability and Medicad) never had any type of tax payer pay deductions. They were always funded by current year tax revenues.
Sure in a handful of areas but for 70% of people living in the US an electric car is cleaner than nearly all hybrids. http://blog.ucsusa.org/dave-re...
You have to look at the energy trends over the entire life of the car, those MPG equivalent ratings have gone up year after year as new cleaner power plants come on line. Maybe for the next 3-4 years a hybrid has a narrow edge but for the next 6 years your power source will get cleaner while a hybrid remains in the same spot.
One of the really nice things about an EV is that you can shift between generators without lock-in to any single fuel source. If huge natural gs reserves are unlocked you can power your vehicle on natural gas. If solar comes out cheaper you can run on solar. If you do run on coal, you're still relatively clean
Even at $5341 it pushes every electric car other than the Tesla X, Tesla S and BMW i3 below the median new car value.
Coal power is used to charge the EVs and coal ash has the same problems when the coal ash lakes spill into rivers.
Even if you use coal to charge the EVs, the overall emissions are still less than if you put petrol into an ICE-based vehicle, especially if you run your scrubbers correctly. Also, since we have laws requiring running the scrubbers correctly (although nobody follows them because the penalties are so meaningless, and we can find out-of-compliance plants literally as fast as we can pay people to check on them, which was true before Trump and is probably much worse now) it's not reasonable to blame the vehicle owner for that. They're acting in good faith, let's force the power companies to do the same. They are, after all, barely one small step above Nazis when it comes to the moral high ground. Or didn't you watch Erin Brockovich?
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
A tax credit is a credit against taxes owed, after you have calculated taxes on your taxable income. The cretit may be refundable (you get all of it) or non-refundable (you get no more than the amount to zero-out your tax liability.)
If it's non-refundable, it is not really a credit. It's a discount. This language was designed to confuse you, and it is working. Credit is something you get. A discount is something you don't have to pay. It's obvious that a non-refundable "credit" is actually a discount.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
No, people are stupid and too lazy to use Google. Deductions and credits are one of the simpler things to understand in the tax system. Once you think in terms of "taxable income" both make total sense.
The complexity isn't the terms themselves but the shear number of them and the rules for qualification. The concepts themselves aren't bad. They encourage market & resource direction. But I think they have long ago become nothing more than chips in the political lobby poker table.