Corporate Welfare

Bipartisan Support for Electric Vehicle Handouts Betrays Taxpayers

Corporate welfare raises its ugly head again.

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Excessive partisanship and endless acrimony are common complaints lodged against the political class. There's a lot to be said in favor of this narrative, but bipartisanship isn't always what it's cracked up to be, either. As evidence, consider the latest attempt to extend corporate handouts for electric vehicle (EV) manufacturers.

The Driving America Forward Act was recently introduced to extend the existing EV tax credit well beyond its current limits. Unsurprisingly, its sponsors include both Michigan Senators, Democrats Debbie Stabenow and Gary Peters, as well as Republican Senators Lamar Alexander of Tennessee and Susan Collins of Maine. A companion version was introduced in the House of Representatives by Rep. Dan Kildee, also a Democrat from a district in Michigan.

Under current law, a federal tax credit of up to $7,500 is available to consumers of the first 200,000 vehicles sold by each manufacturer, after which the credit is phased out. Both Tesla and General Motors have exceeded the cap, a fact that has driven a lobbying frenzy to extend the benefit. This wouldn't be the first time the credit was expanded, as the original incarnation of the credit applied only to the first 250,000 electric vehicles sold across all manufacturers.

This new legislation will allow for the purchase of an additional 400,000 vehicles to be eligible for a $7,000 credit, but it might as well be permanent. If Congress passes the bill and it's signed into law, Washington will be sending a clear signal to manufacturers that the gravy train may never end. All the EV makers must then do is flood Washington with lobbying and campaign donations once the next deadline approaches and the cycle could no doubt continue.

The current credit is expected to cost $7.5 billion in federal revenue from last year through 2022, according to the Congressional Research Service and the Joint Committee on Taxation. The costs of the newly expanded credit are not yet available but would be considerably higher.

Almost 80 percent of those utilizing the EV tax credit have incomes over $100,000, making it not just a corporate handout but also a transfer from all workers to wealthier Americans. And despite its advocates' claims, the EV tax credit fails to reduce the alleged threat of climate change.

Because all personal vehicles in the United States account for only a small fraction of global greenhouse gas emissions, even an unrealistic influx of electric vehicles would prove to be negligible. Besides, standard internal combustion engines emit far less pollution today than they have in the past. Simply replacing older cars can do as much or more to benefit the environment than even entirely switching over to electric vehicles.

This is at least the third major push to extend EV tax credits over the last year. The persistence of the issue is indicative of a political reality less obvious than the typical Republican versus Democrat framework. In economic parlance, it's called concentrated benefits and diffuse costs. The benefits are conveyed to EV manufacturers and those few consumers (most of whom make over $100,000), but the costs are spread out across the larger population.

While the manufacturers and relatively wealthier consumers of electric vehicles have a strong incentive to support the tax credits, the average cost per taxpayer is low and thus of little political concern. Yet, when all the crony handouts that come about because of this same dynamic are added up, it represents a more significant sum and is a more obvious problem. But translating that burden into a political force that's capable of resisting the well-funded pleading of special interests is extremely difficult.

In this case, the fact that the handouts are already set to end if Congress just does nothing should benefit the taxpayers. That's often not the case, and it explains why the special interests have failed several times already in their attempts to preserve their benefit. Unfortunately, it's readily apparent that they're going to keep trying again and again to enrich themselves at the expense of the taxpaying public.

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  1. Ooh, it sounds like Mad Libs®!

    Bipartisan Support for _______________ Handouts Betrays Taxpayers
    Corporate welfare raises its ugly head again.

    1. “Ooh, it sounds like Mad Libs®!”
      What be this?

  2. Pretty sure that Musk has yet to make a dollar which wasn’t plucked from the taxpayer’s pocket.
    Oh, he’s very clever. At picking your and my pockets.

      1. Yeah the vast majority of his wealth still comes from PayPal. It’s the entire reason why he was even able to jump into these industries. This doesn’t excuse the government handouts, but let’s not dismiss how he actually made his money.

      2. So he got lucky once and now you and me get to make sure he retires wealthy?

  3. Congressman __________ was worried about his re-election. He needed _____ for his forthcoming campaign, and to get his ________ a shiny diamond ________.

    Although he was a member of the __________ Party, he got together with a __________ Congressman to sponsor a bipartisan bill subsidizing __________.

    The campaign donations rolled in, and Congressman _________’s _______ gave him the best ____ ___ he had ever received.

    1. You forgot to include the type prompts (noun, adverb. …).

      1. You *want* me to get sued?

    2. Susan Collin’s involvement demonstrates that you should write “Congress_” and let the writer fill-in the blank with “man”, “woman”, “person”, etc:)

      1. Nah. It’s just “Senator” and “Representative”.

  4. “Bipartisan Support for Electric Vehicle Handouts Betrays Taxpayers”
    “Unsurprisingly, its sponsors include both Michigan Senators, Democrats Debbie Stabenow and Gary Peters, as well as Republican Senators Lamar Alexander of Tennessee and Susan Collins of Maine. ”

    Both Sides!

    Two Democrats, and those rock ribbed conservatives Lamar Alexander and Susan Collins.

    When the time comes to vote, does anyone think more Republicans vote for this than Democrats?

    1. No you’re totally right.
      Those Republicans are much more likely to vote for handouts to farmers instead.
      Or maybe handouts to coal miners.

      1. Lamar has gone full on CarbonKooky, so guess again.

  5. How about a tax credit for $100,000.00 for everyone who buys and rides a bicycle?

    You’re helping to save the earth from destruction, which may happen in 12 years if everyone doesn’t stop driving a car, and you’re getting yourself fit.

    1. Nice thought; but it violates the ADA.
      You would have to also subsidize hiring ‘pedal persons’ to drive around those who are not physically able to ride a conventional bicycle. And pay a gazillion dollars for a federal study of how to design a “bicycle-like, subsidy compliant, multi passenger human powered wheeled device”.
      But cling on

  6. How about some subsidies for fancy sailboats? The bigger the sailboat, the more people you’re taking off the road!

    1. There are subsidies for everything at most state and local levels, including energy, water and sewer for minimum wage labor. (ya know, instead of paying a COLA wage…why not spread it over the taxpayer)! Pretty soon corporatists will have housing, energy, food, medical, babysitting, education and transportation.

  7. Save poor Elon! Steal from the poor and give to the rich!

    1. yep, thats how we roll in the U.S. Poor Musk could be a ward of the state at some point.

  8. Better idea; put a $7,500.00 tax on electric vehicles to make up for the gas taxes they don’t pay. Or charge them by the mile based on GPS tracking their every move.

  9. Congresscritters aren’t consider the reduction in revenue from fuel taxes. It’s not like they can later fuck EV owners sideways with other taxes because they’ll be accused of sabotaging a necessary green policy out of greed. In othet words, non-EV owners are going to be fucked deep and sideways because that revenue is certainly not going to be ‘lost’, it’ll be achieved through higher fuel taxes and other ‘pro-green’ schemes.

  10. Seriously?

    Earlier this week y’all were literally cheering tax avoidance by any means. “Taxation is theft” and all that jazz, remember?

    It’s almost like you distinguish between which tax breaks are righteous tax avoidance and which tax breaks are “subsidies” based on a partisan bias.

    1. Tell me about it.

      Tax cuts = letting people keep their own money
      Tax credits = stealing from other taxpayers

      Give me a break

  11. Screw that, a Tessla model S if you can get one is 80-100 k with the tax credits. I would love one. It is an awesome car.

    The 35k models do not really exist. Those things Chevy made I would be emarrased driving to the grocery store.

    The tax credits are not near enough to influence a purchase choice. I have looked into it.

    Tax credits mean you pay less tax. Something libertarians now oppose.

    What is more important to me. There is a market for electric cars. Some of them work. The government should not try and distort the market. If a product is profitable and appeals to consumers they will buy it.

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