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We Should Eliminate Federal Electric Vehicle Subsidies for Rich People

79 percent of the EV tax credits go to households with adjusted gross incomes of $100,000 or higher

TeslaTeslaThe Federal government currently offers a $7,500 tax credit to purchasers of electric vehicles (EV). A Pacific Research Institute study published earlier this year reported that 78.7 percent of the EV tax credits were received by households with an adjusted gross income (AGI) of $100,000 or higher, and that more than half went to households with an AGI in excess of $200,000. Basically, the federal government is subsidizing rich people to indulge their tastes in driving expensive electric vehicles.

The Feds did, however, limit the these tax outlays by putting a cap of 200,000 vehicles that can be subsidized by each manufacturer. EVs manufactured by Tesla and General Motors are on the verge of no longer qualifying for tax credits since those companies will likely exceed their 200,000 vehicle thresholds this year. This means that the vehicles from EV manufacturers who have not yet crossed that threshold will have a subsidized relative price advantage over Tesla and GM.

Members of Congress worried that crossing the 200,000 vehicle threshold will harm EV "first mover" manufacturers introduced legislation in July that would eliminate the 200,000 car threshold. In addition, the proposed legislation would change the tax credit to a direct rebate available for the next ten years instead of requiring EV buyers to wait for their tax refunds. Some 36 electric utilities eager to sell more power to EV owners have also urged Congress to remove the manufacturer cap.

Today, a consortium of free market think tanks have sent a letter to Ways and Means Committee Chair Rep. Kevin Brady (R–Tex.) strongly objecting to "any effort to expand the current electric vehicle tax in any way." The letter points out that if companies like Tesla and GM are "concerned about uneven tax credit treatment, then the answer is to eliminate the tax credit entirely, as the House proposed in last year's tax bill."

This is exactly the policy urged in Reason last June by Mercatus Institute economist Veronique de Rugy. "Congress failed to fully utilize the opportunity afforded by last year's tax reform to end the electric vehicle tax credit and other programs that force all taxpayers to subsidize the activities of a tiny few," she noted. "At a minimum, Congress should avoid compounding that error and resist the call of special interests to expand electric vehicle subsidies."

It is well past time for Congress to eliminate federal EV subsidies for the rich.

Photo Credit: Tesla

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  • esteve7||

    we should eliminate subsidies period, but if you have to have them, they shouldn't go for luxury items. My VP has a Tesla and it is amazing to drive, but why am I playing for his rebate?

    But it isn't bad because it helps 'the rich', it is bad because it is bad on principal.

  • BestUsedCarSales||

    It's bad on principal, but on a gut level it rings more obnoxious when it goes to wealthy people who should just buy it themselves.

  • OverWandersTelcon-tarian||

    I do hate to be the grammar-Einsatzkommando, but I'm going to have to stand on my principals here.

  • Shirley Knott||

    Standing on the necks of giants.
    Or, as the case may be, pygmies.

  • Diane Reynolds (Paul.)||

    You're bad on principle and on a gut level.

  • BestUsedCarSales||

    *Your bad on principle and on a gut level.

  • Jerryskids||

    Which is how you have to sell libertarian ideas to progs - just like they jumped up to legalize street vendors once they realized they were illegal aliens at risk. It does no good to argue principles to people who argue emotions, you gotta approach them at their level. Crony capitalism is a good starting point.

  • Fist of Etiquette||

    So suddenly the world wants to means test subsidies? What happened to the American dream, when we all thought some day we would be the rich fuck driving around in a sweet, shiny product of government nudging?

  • Marcus Aurelius||

    Who doesn't aspire to be the Sheriff of Asset Forfeiture?

  • The Last American Hero||

    It's a good way to throw it in the face of the left, since they like to blather on a lot about income inequality and tax breaks for the wealthy.

    I still don't quite understand how we got them, since Team Red isn't getting any votes for supporting the subsidies and Team Blue likes to talk about those evuul rich people.

  • ||

    I still don't quite understand how we got them

    Climate Change.

  • Marcus Aurelius||

    Solyndra

  • chemjeff radical individualist||

    Yeah, this is a complete no-brainer.

    Stop subsidizing the rich.

  • juris imprudent||

    Nothing left to cut.

  • Marcus Aurelius||

    Except some bitches

  • OverWandersTelcon-tarian||

    OT:

    I've heard people around here saying that EVs can never replace ICE vehicles, because there aren't enough battery elements in the world to supply the number of vehicles required, especially if large batteries are needed to allow solar/wind plants to provide electricity at night as well. What is the evidence for this?

  • Diane Reynolds (Paul.)||

    because there aren't enough battery elements in the world to supply the number of vehicles required

    I've never heard that. I have heard that there are external costs to making everything run on a battery that could possibly outpace any external cost of the Infernal Combustion Engine -- particularly in the environmental realm.

    People have also pointed out that battery technology still has a long, looong way to go before it can even come close to matching the efficiency and energy density of gas/oil.

    TESLA has done a decent job at it, but they're heavily subsidized at both federal and state levels and are losing money like crazy.

    Toyota, NISSAN et. al have all deconstructed half a dozen TESLAS to get a look inside their battery technology, yet it's no surprise they haven't produced anything even matching it. Probably because as experienced car manufacturers they see some serious long term ROI implications with what TESLA is doing.

  • BestUsedCarSales||

    We would probably need a significant breakthrough in batteries for that. I believe we're still getting approximately linear growth in density improvements. Batteries are slow moving research.

  • Marcus Aurelius||

    Alternatively, you need trust and standardization so batteries can be hot swapped anywhere (like propane tanks). Much more efficient to get the juice from the source than to charge batteries at home.

  • Scarecrow Repair & Chippering||

    Probably a lot like peak oil. I have zero doubt that as the price of rare earths rise, not only will new inventions reduce the need for them, but new sources will be found. IOW, a vapid argument.

    Markets work wonders. Free markets do even better.

  • Gilbert Martin||

    EV's will never replace ICE vehicles unless and until they solve the range and recharging time and place problem so that they are EXACTLY equally as convenient to use as ICE vehicles.

    Because there will never be any mass adoption of them by consumers otherwise.

  • Marcus Aurelius||

    *without coersion

  • Rat on a train||

    We can just power vehicles with our sense of self-satisfaction.

  • Jerryskids||

    I'm sure they'll get right on that. Just as soon as they end the wool and mohair subsidy program. Or any other government program.

  • juris imprudent||

    Why yes you is my constituents!

  • Sevo||

    And for poor people.

  • Ron||

    EV's are for rich people because they can afford to have a gas powered car for everything else. People who need a car but can afford only one buy what is the most useful to them hence why gas guzzling pickups are such big sellers

  • ||

    ^ This.

    If you're the type of person who may need to travel more than 50 miles in a sitting, an EV simply will not do. They're only viable if you already have other options.

  • SIV||

    This means that the vehicles from EV manufacturers who have not yet crossed that threshold will have a subsidized relative price advantage over Tesla and GM

    Like the Porsche Taycan

  • Shirley Knott||

    Drool.
    But nobody should have to subsidize my purchase of one. (As if)

  • NoVaNick||

    the federal government is subsidizing rich people

    That's why the DC metro area is the wealthiest in the US

  • Josh Melton||

    If the incentive to purchase an EV is legitimate, whomever uses it shouldn't matter. It can be argued that the rich are responsible for bringing technology previously found only on high-end luxury vehicles, to the masses. They pay the high price for the new tech and it drives down the cost. Isn't that the whole intent of the program: to drive down the cost for the masses? I don't think our "leaders in Congress are smart enough to have planned this, but it may work out by driving costs down over time. And yes, those with an AGI over $100K are some of the only ones capable of affording any of the quality electric vehicles. That doesn't make them less deserving of the rebate, unless you're a liberal who doesn't understand economics and renders opinions on groups versus individuals. Mr. Bailey?

  • Sevo||

    "If the incentive to purchase an EV is legitimate,"

    It isn't.

  • Marcus Aurelius||

    I would like to take advantage of a subsidy for wind powered transportation (colloquially, a "yacht")

  • Rossami||

    We Should Eliminate Federal Electric Vehicle Subsidies for Rich People

    Fixed it for you.

  • Let freedom ring||

    Hey, I've got a better idea. Why don't libertarian publications like this one tell the truth about the income tax?. Once Americans understand that the US Individual income tax is merely a tax on profits earned from a federal privilege, then all this social engineering will dry up. They can easily interview Pete Hendrickson in Michigan, near Detroit where many cars are manufactured. They can interview some of the many individuals who have posted YOU TUBE testimonials. They can determine that the problem with the income tax is not this kind of social engineering, or that its too complicated, or that is soaks the entrepreneurial rich, but that it is deceptively sold by the Federal government as a tax on everything that comes in. That would be a very, very big story. But no, libertarian and conservatives are either too timid or just plain dumb to pursue a story that big. see www.losthorizons.com

  • CE||

    Yeah, understanding it your way will make it so.

  • renewableguy||

    The purpose of the subsidy is to reach economy of scale so that the people of lesser income can afford the electric cars in the future. We haven't really reached that point yet and there should really be several hundred thousand more cars available with rebates.

    Clean energy transportation needs to move rapidly to decrease adding pollutants GHG's to the atmosphere.

  • NotAnotherSkippy||

    The purppse is to rewaed cronies like you with your scientifically illiterate econut religion. And that's a shitty purpose.

  • Gilbert Martin||

    There is never actually any legitimate purpose for any government subsidy of any type

  • CE||

    And once the subsidies are gone, stop giving them a free pass to the HOV lane and preferred parking spots.
    Then get rid of the HOV lanes entirely.

  • NotAnotherSkippy||

    Charge a special tax to claw back the subsidies. And certainly a mileage tax instead of their free road use.

  • loveconstitution1789||

    To be fair, GM got one of the largest bailouts in US history.

    If there is going to be a welfare state, EV companies should get some too.

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