Subsidies

The Tesla Tax Break and Other Green Tax Credits Go Mostly to the Rich—Surprised?

The top income quintile received about 90 percent of all electric and hybrid car tax credits.

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Tesla
Tesla

Do poor people drive Tesla roadsters? Not exactly. The average household income of Tesla owners is just shy of $300,000 per year. Low end models begin at $70,000 but rise to over $105,000. Fortunately, the Feds take a bit of the sting out of the price by handing over a $7,500 tax credit to purchasers of electric cars. A new study, "The Distributional Effects of U.S. Clean Energy Tax Credits," by two energy economists at the University of California, Berkeley finds that the rich are the chief beneficiaries of billions in federal tax credits aimed at encouraging people to buy and install energy efficient and low-carbon technologies. From the study:

There is wide agreement among economists that the best policy to reduce greenhouse gas emissions and other negative externalities from energy use would be to use a tax or cap-and-trade program. Although there has been some movement in this direction, the vast majority of energy-related externalities worldwide remain unpriced.

Instead, the approach that is receiving increased attention, mostly in richer countries, is to subsidize lower-greenhouse gas alternatives to traditional fossil-fuel based technologies. It can often be easier politically to introduce subsidies than taxes, but the two are not equivalent.

And if the subsidies go mostly to rich people, that surely makes the politics all that much easier to navigate. Looking at tax credits since 2006 awarded for solar panel installation, weatherization, electric car purchases and so forth, the researchers report:

We focus on four major tax credits for individuals aimed at encouraging households to weatherize their homes, install solar panels, and to buy hybrid and electric vehicles. Since 2006, tax expenditures for these clean energy" tax credits have exceeded $18 billion. …

We find that these tax expenditures have gone predominantly to higher-income Americans. Overall, the bottom three income quintiles have received about 10% of all credits, while the top quintile has received about 60%. The most extreme is the program aimed at electric vehicles, where we find that the top income quintile has received about 90% of all credits. We show that the distributional pattern is similar across years and reflects that higher-income taxpayers are much more likely to claim credits and for signicantly larger credit amounts.

Whereas tax credits are received disproportionately by high-income households, a carbon tax would be paid disproportionately by high-income households. Hassett et al. (2009), for example, find that with a carbon tax the top income quintile would pay about four times as much as the bottom quintile. It would seem difficult, therefore, to prefer tax credits over a carbon tax on distributional grounds. There may well be political considerations that continue to favor tax credits, but this approach comes at real cost, both in terms of efficiency and equity.

Well, yes.

I can't help wondering if fierce egalitarians like Senators Bernie Sanders (I-VT), Dianne Feinstein (D-CA), Charles Schumer (D-NY), Harry Reid (D-NV) knew that they are subsidizing rich celebrities like Stephen Colbert, Steven Spielberg, and Will Smith when they voted in favor of tax credits for new qualified plug-in electric drive motor vehicles? I am sure their intentions were good.

NEXT: "Boehner is the type of guy who couldn't get laid in a monkey whorehouse with a handful of bananas."

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  1. OK FUCK TESLA, TOO!!!

    YOU GUYS GOT ANY GOOD NEWS FOR A FUCKING FRIDAY AFTERNOON??!!!

    OHHHHHHHHHH NOOOOOOOOOOOO – WE’RE LIBERTARIANS AND EVERYTHING IS BAAAAAAD!!!

    WELL…….FFFFFFFFFFFFFFFFFUCK!!! FUCKFUCKFUCKFUCK!!!!

    1. YOU GUYS GOT ANY GOOD NEWS FOR A FUCKING FRIDAY AFTERNOON??!!!

      How about the earliest evidence of salmon fishing (11,500 years ago)? Not great, but interesting anyway.

      http://www.pnas.org/content/ea…..70e591810d

  2. Man, it’s really, REALLY nice out. Gonna put the top down on the Mustang I just picked up last Friday (2016 with the 4 cyl EcoBoost – decided to try that ILO the V8).

    That should be super relaxing and awesome! Ya’ll have a good weekend!

    AND FUCK TESLA!!!

    1. FFFFUCK YOOOOOOOOOOOOOU MANG

      1. OK, mang. Ju gotta prollem wi’ me? Ju make a move….

        1. Sorry, i thought we were just sayin’ cusses.

    2. Let me know how you like the 4-banger… been eyeing that or the BMW 228i

      1. The Mustang with the fake engine noise?

        1. BMW does it too!

        2. yeah… not a fan… but it’s RWD and can be had with a stickshift (both cars)

          1. I am sure that is appealing, but the fake engine noise is asuming.

      2. So far, a lot. I’ve had nothing bit GT 5.0 convertibles for….a long time. I’m getting 30 mpg already, and the pickup is very linear. You can tell it’s not a V8 – put it’s “powerful enough” for me at this point.

        The only thing I don’t like? Exhaust note. They’re not faking anything – it’s all 4cyl.

        Otherwise – LOVE it!

  3. It’s a box on a spreadsheet.

    Happy fun electric good-for-mother-gaia-cars get a subsidy. *check*

    1. People who own a home (or a second, or a third) get a subsidy *check*
      People who add another child to the tax base get a subsidy *check*
      People who file their relationships with the state conjugal registry get a subsidy *check*

      Almost as though the State is pandering to particular socioeconomic voting blocs while simultaneously incentivizing more people to join them.

      1. People who own a home (or a second, or a third) get a subsidy *check*
        People who add another child to the tax base get a subsidy *check*
        People who file their relationships with the state conjugal registry get a subsidy *check*

        Exactly this.

        And yet no one was shocked back in the 90s when (I’m too lazy to google it) one of the Clinton apparatchiks said that the long-term strategy was for Democrats to become “The Party of Government” that the idea was to get all socioeconomic strata subsidies from the government, not just poor people.

        The strategy has worked well for them, I’d estimate.

      2. I wouldn’t say getting to keep more of my income is a subsidy.

        But then, I wouldn’t take back more from the government than I actually give it if I qualified for all those credits and deductions.

  4. Yes, but those rich worship at the alter of AGW and vote for the correct politicans, so it’s OK.

    1. Being rich is awesome. You should try it.

      1. I’ve been rich, and I’ve been poor.

        Poor sucks ass.

  5. I live a few miles from a “supercharger” station, so I frequently see Teslas, and I am glad those poor owners are finally getting a break in this world.

    1. The nearby supermarket has seven Tesla charging stations – most I’ve ever seen using them at the same time? Two.

  6. Not surprising. The interesting question however is how much do we provide in tax breaks to the oil companies and the car companies as a comparison. Telsa is getting a lot. However in comparison to others is it a lot?

    1. Corporate welfare is bad no matter who is getting it. The fact is that Tesla gets a pass from a lot of folks on the left for whom phrases like “Tax breaks for the wealthy” and “Corporate Welfare” are trigger words.

      1. Not sure what you mean. I see mention of Tesla and tax breaks all the time pretty much everywhere. But I see virtually no coverage of tax breaks for other car manufacturers.

        Ford got away with being bailed out and that virtually got no coverage from the mass media. (5.9 billion ATVM loan + 15.9 billion from the federal reserve as part of the banking bailouts)

  7. Buying a Tesla is a good way to tell the world you’re an insufferable asshole.

    1. Based solely upon my own limited experience (which means it is pretty much fact), a Tesla driver most often resembles a villain from a 1980s John Cusack movie.

      1. Funny I always thought they looked like the villains from John Holmes flicks.

        1. Erectile dysfunction?

          1. close, but mostly the pussy he was punishing.

    2. My Tesla Model S is two weeks old today.

      But everybody already knew I was an insufferable asshole.

      OK, just kidding — I’m sufferable.

      I didn’t really know anything about the car until a couple of months ago. Then I happened to get some details in a biography of Musk. Coolest car ever.

  8. There is wide agreement among economists that the best policy to reduce greenhouse gas emissions and other negative externalities from energy use would be to use a tax or cap-and-trade program.

    And based on the statistics of their predictions versus subsequent reality, we can safely say that economists are the stupidest life form on the face of the earth.

    So widespread agreement among the stupidest people on the planet is really a way of saying that taxes and a cap-and-trade program would likely triple the production of greenhouse gases.

    1. Actually, the concept of the carbon tax is pretty interesting. I am guessing when you hear carbon tax you think more taxes. But in detail the concept is actually tax neutral. Because it revolves around eliminating the income tax.

      Effectively it moves taxation from simply earning money to consumption. So many people will actually see a reduction in taxes. On top of that, since waste is taxed, you can reduce the amount of regulations as well. (As pollution becomes less profitable)

      That is of course assuming it is implemented as intended, if it is implemented on top of the income tax then that defeats the purpose.

      As far as cap and trade, meh. Too much room for cheating and mostly BS.

  9. This is actually a pretty stupid article. Why the fuck would I buy an appeal to authority which is what “A new study, by two energy economists at the University of California” essentially is.

    “Energy economists” sounds like snake oil salesmen to me. Should I be surprised that economists quote other economists as experts? There’s nothing neutral about this study – it’s economists kissing the asses of other economists.

    I consider the tax credit to be a rebate of the cost of the gobs of regulations that jacked up the cost of the car in the first place. I don’t really give a shit about the asinine “class war” aspects of the tax credit – it’s a fallacious canard no libertarian should ever buy into.

    1. True but i think the point is to show the dems arent really what they claim to be looking out for despite their claims that pubs give all these breaks to the rich and they are for thr middle class.

      The dems love being rich and like the rich that are on their team…the other team not so much.

    2. I consider the tax credit to be a rebate of the cost of the gobs of regulations that jacked up the cost of the car in the first place. I don’t really give a shit about the asinine “class war” aspects of the tax credit – it’s a fallacious canard no libertarian should ever buy into.

      They aren’t regulations specifically targeted at electric vehicles while the credits are.

      I didn’t take the class warfare point as an argument against the technology as I did against political ethics and rational consistency.

  10. There are a SHITLOAD of Teslas in Seattle. They are not–I repeat NOT–driven by poor people. They are a marker of affluence. That’s sort of their point.

    That should tell you all you need to know about people who buy Teslas, no matter how much they squeal about being green.

      1. Dude, they are Priuses times 10. I’m not even remotely kidding. You think smug wafts off of Prius owners? Try a Tesla owner. You’ll need a fucking gas mask.

    1. BTW, the company I work for counts Tesla as a “marquee client” so uhh, subsidize away glibertarians… the contents of your wallets is, indirectly, being transferred into my wallet.

      And like a public school teacher, don’t expect any gratitude, thanks, or bottles of scotch from me, bitches.

      1. You rapacious slut.

    2. Is any expensive car not a marker of affluence?

      I’ve never squealed about being green, having never been green.

      I love my new Tesla.

  11. To be fair, even with this expenditure, the buyers still pay ~60% of all taxes.

    Tesla is a perfectly acceptable car. It’s a rather impractical torque-monster, and if you add up all the sources, produces more than enough potential pollutants to piss off an appropriately educated tree-hugger. Plus, you get to explain that to the tree hugger.

    If only each unit came with a certificate allowing the buyer one free nut-punch on Elon Musk, it would be a totally acceptable purchase. Especially if you add a “Nuclear Power – Yes Please!” bumper sticker.

    1. True. Though i wonder if it occurrs to them where the electric is likely coming from

      1. From the solar cells on the roofs, obviously.

    2. Its energy (“fuel”) costs to the owner are less than those of gasoline-powered cars.

      It’s more practical for a homeowner driving around town — plug it in overnight in the garage and never stop at a gas station. It’s rather or wholly impractical for extensive driving away from home other than on well-worn paths such as Interstates.

      And, it’s a computer on wheels. For me, it’s almost perfect.

  12. Fortunately, the Feds take a bit of the sting out of the price by handing over a $7,500 tax credit to purchasers of electric cars.

    Odds are the price of the cars would be $7,500 LOWER without the tax credit.

    Therefore, the tax credit is really NOT going to the individuals, it’s going to Tesla. This is no different than the credits on the original Prius and the Volt. When those cars had tax credits, their prices were higher. And soon as the tax credits vanished, the prices dropped.

    This is no different than student loans. The richest students can get cheap loans, but the actual beneficiaries are the colleges who jack up their sticker prices because of the government assistance.

    1. Good point though it kind of contradicts what you said above about regulations driving cost up so ok with tax credit though here you talk about how they are just marking it up for teslas own benefit which suggests isnt really do to regs.

      Perhaps you can merge both points together that with less regs than it would be less than the pre tax credit non marked up price

      1. My earlier point was a bit sloppily made. Any new technology is likely going to initially target people with more disposable income. But “top quintile” is a rather useless phrase, since the top quintile has the largest income range from top to bottom. Government regulation on top of that can only push the appeal to the highest end of the top quintile because of the added costs which forces it to maintain that appeal longer.

        I can’t go into a long explanation in a post, but the tax credit applies to a Volt as much as to a Tesla.

        In 2012 a Chevy Volt cost twice the price of a Prius. In 2015 a 2012 Volt costs the same as a 2012 Prius. I know we can’t totally dispense the “American cars suck” reason behind such a drop in value, but the reality is that a 2015 Volt stickers for $7500 over a Prius BECAUSE OF THE TAX CREDIT. After applying the credit, the Volt and Prius are similar in price.

        The entire purpose of the tax credit is an “exclusivity scheme” to funnel the money of stupid people into the coffers of GM. The same is true for Tesla. The tax credit isn’t a gift to the rich, it’s a way to get the rich to pay more to corporations that crony-up with government.

        1. You are a bit mistaken. Tesla’s price would be the same, with or without the tax credit. They can’t produce the car fast enough to meet demand.

          They also have a global fair price policy, aka the car costs the same anywhere in the world + shipping + import costs of course.

          So in countries which have more tax credits to countries that have no tax credits. Tesla sells the car for the same price.

    2. I’m beginning to think that at least one forumite drives a Tesla.

      1. If you think it’s me, you might be an economist.

  13. Never in a million years would I have guessed this.

  14. with the 4 cyl EcoBoost – decided to try that ILO the V8

    Bah! Traitorous scum.
    *crosses Almanian off Christmas list*

  15. Carbon tax, Ronald? That’s what you want? Let’s take one of your examples, Sanders. You of course know he introduced a carbon tax in 2013. Did you support it? Of course not.

    http://grist.org/climate-energ…..kled-pink/

    Carbon tax is dead on arrival thanks to all your GOP cohorts. So Sanders does what he can.

    But let’s hear it…you want a carbon tax? Have some courage.

    1. http://www.nytimes.com/2015/09…..arbon.html
      derp derp derpity derp derp derp

      1. Did you read the article you cited? Nah, that would take intellectual curiosity.

        It’s about conservatives in CANADA who have been for carbon tax. Here? Read it and weep.

        “Could such a situation happen in the United States? Right now, it is hard to imagine, as many of the Republicans vying for the presidential nomination pander to the deniers of climate change. But the experience of British Columbia suggests that this attitude could change.”

        Could change. And the one who champions it here? Bob Inglis. Who the GOPbooted

        Idiot. Thanks for citing an article that proves my point.

    2. Look Joe, just cause you’re a tiny little muppet who has to breathe in everyone elses farts, depriving you of precious oxygen needed to make your brain work on a 3rd grade level, doesn’t mean everyone else should have to suffer.

    3. Fucking reading comprehension, how does that work?

  16. Take that, you Rethuglitard shill!

  17. On the other hand a used i-miev is like $6000.

  18. Government is just the name we give to all those things we do to each other.

  19. To receive a tax credit of $7,500, you need to owe at least that much in income tax. It’s no surprise that poorer people get less of the credit. That would be the case even if they stretched and bought Teslas in equal numbers to the rich.

  20. Oh, poo. Who’s sill driving Teslas? That’s so last decade.

    If you’re not driving a Rimac or better, then I feel sorry for you, since you probably live in Povertytown, too.

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