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Republican Tax Plan Kills Electric Vehicle Credit (arstechnica.com) 481

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.
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Republican Tax Plan Kills Electric Vehicle Credit

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  • Coal Cars (Score:3, Funny)

    by 0100010001010011 ( 652467 ) on Friday November 03, 2017 @03:44PM (#55485667)

    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.

    • Kerosene from Coal is about $3 a gallon. Kerosene is $1.50 a gallon.

      Far more economical to just power Electric cars from coal.

  • by El Cubano ( 631386 ) on Friday November 03, 2017 @03:45PM (#55485675)

    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.

    • by Anonymous Coward on Friday November 03, 2017 @03:55PM (#55485759)

      The theory behind them is that it is to keep America potentially self sufficient when it comes to food. Left to the free market, we would buy much cheaper food from overseas and American farms would shut down, not that there is anything wrong with that from a free market perspective. However if war were to break out and our source of cheap overseas food cut off, it could lead to famine if we don't have a local ability to produce food up and running to jump in and pick up the slack.

      How well the subsidies achieve this and whether they are the optimal amount, I dunno.

      • by tomhath ( 637240 )

        The other major effect (and really the primary one) of Ag subsidies is to put more control of farming practices into the hands of the government. You can't collect the subsidy unless you follow the rules, e.g. soil conservation, nutrient governance, etc.

        Farmers are notoriously independent minded and generally dislike government interference for good reasons. Historically, government regulation, while good for society as a whole, very often means the individual producers are asked to sacrifice for the commo

        • by Anonymous Coward on Friday November 03, 2017 @04:38PM (#55486099)

          You can't collect the subsidy unless you follow the rules, e.g. soil conservation, nutrient governance, etc.

          Sadly, the Freedom to Farm Act from 1996 ended that fair bargain. It dropped the rules immediately, then phased out the subsidy over time. This turned out to be a big scam, because the Farm Security and Rural Investment Act of 2002 kept subsidies going, but kept the rules out. This mess is hardly ever talked about, because rural America votes anti-government, but is a solid block for keeping its pork.

          • by fafalone ( 633739 ) on Saturday November 04, 2017 @01:17AM (#55487857)
            Republicans are not anti government. Not now, not ever in modern times. Just another fake talking point with no connection to actual outcomes. "Small government" is simply code for massive foreign war apparatus, massive militarized police and prison complex with as much intrusion as possible to arrest undesirables, and the pork you mentioned, and all the other things. They don't favor reducing the size and cost, just moving money from social programs, science, etc to the parts of government they like, along with gutting anything standing in the way of helping the rich get richer.
            Some individuals may want smaller government, but a vote for the Republicans is not a vote for it unless one is deeply ignorant of actual positions, although that seems like a majority. And it's sad that I have to explain this, but no I'm not saying the Dems are small government. Both parties are equally bad on many things.
      • Left to the free market, we would buy much cheaper food from overseas

        For most bulk crops such as corn, wheat, and soybeans, America is the world's low cost producer. Nobody is going to put American farms out of business.

        The problem is actually the opposite: 3rd world cities buy cheap American food, depriving rural areas of income, and push them into poverty. The solution? Free trade. Poor countries should buy capital intensive crops like grain and legumes from America, and focus on labor intensive crops like tomatoes, strawberries, coffee, and mangoes. That makes every

        • Re: (Score:3, Interesting)

          by darthsilun ( 3993753 )

          The solution? Free trade. Poor countries should buy capital intensive crops like grain and legumes from America, and focus on labor intensive crops like tomatoes, strawberries, coffee, and mangoes.

          Do you mean like my Argentine raspberries and strawberries? And my Mexican avocados and coffee? And my Chilean grapes? And my Guatamalan bananas? IOW I'm pretty sure we're already doing this.

          That makes everyone better off.

          Does it?

          I'm not aware that much of central and south America have geography like the American and Canadian prairies – which we destroyed – that could be converted to growing grains and legumes in the industrial quantities that we do. I'm not totally convinced that America growing grain is what has relegated

      • by ghoul ( 157158 )

        The US has troops in over a 100 different countries around the world. If you think the US can be cutoff from fod imports you are delusional. The Ag subsidies go mostly to huge multi billion dollar Food corporations who own most of the farmland in the US (directly or indirectly under contract farming). Its a case of the poor subsidizing the rich.

    • by PolygamousRanchKid ( 1290638 ) on Friday November 03, 2017 @04:04PM (#55485831)

      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.

      Folks who can afford electric vehicles tend to be much more affluent than the normal folks who need to bust the piggy bank for the small change to barely scrape it over the price finish line. So, in this case, the plan would actually stick it to the rich.

      However, I would really like to see an end to agrictulture subsidies.

      Folks involved in "industrial agriculture production" tend to be even more affluent, and have a bigger budget for hiring lobbyists. They own your Congress Critter. So agriculture subsidies will remain the dug up, stitched up drunk and disorderly Frankenstein Monster that they are.

      The lobbyists can cry rivers of guaranteeing food supply stories and price stability stories, but when push comes to shove, the subsidies benefit rich producers. So the rich win this one.

      • Folks who can afford electric vehicles tend to be much more affluent than the normal folks who need to bust the piggy bank for the small change to barely scrape it over the price finish line. So, in this case, the plan would actually stick it to the rich.

        I don't think that's a reasonable point at all. EVs can be had for pretty incredibly low rates (e.g. eGlofs are advertised at around $49 a month on lease). These are far from rich people's toys.

        Further, the goal of this credit is not to bias either way to rich or poor, it's to encourage the manufacturers to build these cars, and in doing so cause us to build a crap ton more batteries. That will push us down the experience curve on battery production and get us to a point where EVs *and* electric grid sto

  • Gov (Score:2, Funny)

    by Anonymous Coward

    Good! The government should not be picking winners and losers...

    • It's subsidies . . . all the way down.

      When the US government threatened to shut down a while back, I was surprised to learn that we even have subsidies for bow and arrow manufacturers.

      Gee, I'd like to see a Website that tracks all the stuff that has subsidies. The content would be both amusing and shocking.

  • Tesla (Score:5, Insightful)

    by CohibaVancouver ( 864662 ) on Friday November 03, 2017 @03:50PM (#55485717)
    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.
    • Re: Tesla (Score:3, Insightful)

      by Anonymous Coward

      What success? They are losing billions of dollars per year and when electric cars become popular, Tesla will probably be eclipsed completely by companies that actually know how to mass produce cars.

      • by hey! ( 33014 )

        Well, that's a Silicon Valley corporate culture for you. The early game is disruption and the end game is domination, and up to that point you're dominating you're not really expected to turn a profit. In fact Amazon investors are known to complain when Amazon occasionally makes money.

      • Re: Tesla (Score:5, Informative)

        by Denek ( 895184 ) on Friday November 03, 2017 @10:15PM (#55487455)
        They are not loosing billions. They are investing in factory and expansion. Why parent post got 5 stars?
    • Re: (Score:2, Informative)

      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.

      Most folks in the US would assume that Chrysler is an American car manufacturer.

      It's not. Chrysler is owned by Fiat. Your good 'ole Dodge Ram truck . . . is an Italian product. What does Fiat mean . . . ?

      Fehler in alle Teile.

      Fix it again, Tony.

      Failure in automotive technology.

      Fart in a tin.

      Fucking Idiot Assembled This.

      . . . and my personal favorite . . .

      Fucking Italian Automotive Trash!

      No, I've never owned one . . . thank God. But a good friend had one, and got to experience everything that ca

      • I own a Fiat 850. It's powered by a rat (big block chevy for the eurotrash) and spins 44 inch tires on Dana 60 axles.

    • by Rhys ( 96510 )

      The real irony here is that you can't fuel a ICE car with coal (okay, technically you can by converting coal to get something liquid, but nobody does it). You *can* and *do* (statistically speaking) fuel a tesla with coal -- about 30% of it, based on 2016 numbers (https://www.eia.gov/tools/faqs/faq.php?id=427&t=3)

    • by Tailhook ( 98486 )

      Tesla's success

      For some value of "success"... Telsa's greatest success has been funneling public treasure into the garages of upper income private citizens. If this subsidy is cut we'll finally see whether buying a Tesla product is anything more than tax-advantaged virtue and status signalling.

      I personally hope it is, but I'm not willing to perform the mental gymnastics necessary to pretend otherwise.

  • by Gregory Eschbacher ( 2878609 ) on Friday November 03, 2017 @03:50PM (#55485721)

    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)

    • by Pulzar ( 81031 ) on Friday November 03, 2017 @03:54PM (#55485755)

      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.

      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.

      • by Solandri ( 704621 ) on Friday November 03, 2017 @04:29PM (#55486025)
        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 [irs.gov], 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.
        • Even at $5341 it pushes every electric car other than the Tesla X, Tesla S and BMW i3 below the median new car value.

      • EVs are not yet convenient enough to be a working man's vehicle. Many of these people live in apartments or dense housing where charging is difficult or impossible.
      • by hey! ( 33014 )

        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 de

    • by El Cubano ( 631386 ) on Friday November 03, 2017 @03:59PM (#55485783)

      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.

    • 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.

      Which can all be traced back to the way cities are organized in your country, with even simple tasks ("going to buy some groceries") involving driving several kilometers. This makes the general population used to drive longer distance, and therefor anxious about the range of any vehicle, which in turn pressures manufacturer to build EV with huge batteries.
      And as batteries are the most expensive part in an EV, the end result is that in north america, EV are extremely expensive and for the ultra rich only.

      Con

    • What makes you think that these are for the well off? You can lease an eGolf for $49 a month - that's hardly well off rates.

    • 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.

      You only need $56,200 of taxable income (MFJ) to have $7500 in tax liability.
      That's middle income by most definitions. (slightly above $46k median of all US households, slightly below $67k median of dual-earner households)

      A Pacifica Hybrid costs $44k (plus tax, registration, etc).
      Take out $7k of that, and you're at $37k for a nice minivan.
      $37k is a reasonable price for a minivan.

      I have seen 'middle income' defined as being the middle three quintiles of income.
      I've also seen it as currently people in US are

      • by Quirkz ( 1206400 )

        You only need $56,200 of taxable income (MFJ) to have $7500 in tax liability.

        That doesn't seem right. I think you've left out the standard deduction, which would kick it up another $12,600, and the personal exemptions, which would be another $8k. So you'd need more like $76,000, assuming no other credits, deductions, or children. It wouldn't be hard for a family to make $100k and still not actually pay $7,500 in tax.

        $37k is a reasonable price for a minivan.

        If we're still in the context of a $56k as a comparison income, I'd say a $37k car of any kind is outrageously expensive. I don't see how anyone can afford a vehicle tha

    • You're missing the point entirely.

      These tax credits aren't intended as help to the individual, so the individual's wealth status is irrelevant.

      These tax credits are the reverse of taxation. Taxation tends to suppress behavior, where tax credits tend to encourage behavior.

      The poor have the most to lose from climate change, and therefore the most to gain - long term - from anything that helps mitigate it, which expediting the growth of the electric vehicle industry does.

    • 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)

      Though in this case the well-off are also subsidizing the development of the technology, and helping the rest of us by driving vehicles with lower emissions.

      And you'd need a competent economist to do the math, but even ignoring AGW gasoline cars carries significant costs. There's a crapload of subsidies, direct and indirect, that go towards oil, and the actual exhaust causes a lot of damage. Your EV is in many ways cheaper for the government than a gasoline vehicle, tax policy pushing you to an EV is just g

  • 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.

    • The difference is cheaper fuel helps the poor. A cheaper luxury car helps people who can already afford a luxury car.
      • And less demand for fuel makes it cheaper still, and reduces the subsidy needed for the cheaper fuel.

        That said, a better way to achieve that AND help people on ALL incomes, rich and small, would be to legalize sustainable, public transportation compatible, planning. That doesn't even require subsidies.

      • What makes you think that a leaf, or eGolf (both of which can be had for about $40-$50 a month on lease) are luxury cars?

    • The petroleum subsidies ($3.2 billion) [wikipedia.org], even if you attributed them entirely to just motor vehicle fuel sales [eia.gov], amount to 2.2 cents per gallon. It's dwarfed by the 18.4 cents/gallon federal fuel tax [wikipedia.org] and the average 31 cents/gallon state fuel taxes [wikipedia.org]. Petroleum sales results in a net tax revenue for the U.S. government even after you factor in the subsidy. The government distortion of the petroleum market is to discourage its use, not to subsidize it.

      Agricultural subsidies were implemented after the Dust
  • by 110010001000 ( 697113 ) on Friday November 03, 2017 @04:14PM (#55485909) Homepage Journal
    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.
  • by Ichijo ( 607641 ) on Friday November 03, 2017 @04:21PM (#55485965) Journal

    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 [fullerton.edu]) 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 [uspirg.org] (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.

    • Of course, we also need to charge drivers the full cost of the roads

      If drivers were charged the real cost of the roads, trucks would face a very large increase in costs. Cars do almost zero damage to roads, while almost all the wear and tear is due to trucks.

      "The federal government has estimated that a 40-ton, 18-wheel truck causes the same damage as 9,600 midsize cars."
      http://beta.latimes.com/opinio... [latimes.com]

  • I'm not comfortable buying something that involves a handout from people that probably need the money better than I do anyway.
    • by Rhys ( 96510 )

      Good news! Its something you claim on your taxes to reduce them.

      If the IRS notices and sends you a refund, you can include it back to them on next year's taxes on the "pay more to reduce the national debt" line.

      Have fun!

  • People who think the party of rising debt (TRIPLED under Reagan, seriously) will cut debt are insane, and I use the term precisely
  • by pchasco ( 651819 ) on Friday November 03, 2017 @04:43PM (#55486127)
    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.
  • by Khashishi ( 775369 ) on Friday November 03, 2017 @05:32PM (#55486431) Journal

    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.

  • BUT, America needs to work on infrastructure.As such, we need to raise gas/diesel taxes by .01/gal/month for the next 48 or 96 months and use that money for infrastructure only.
    This approach is much better than subsidizing EVs, esp. when the only one dropping in prices is Tesla.
  • I don't see this as a problem because what happened with the electric car tax credit is that Big Auto went "oh you want to give tax credits, okay, we'll jack our profit margin up by exactly the amount of the tax credit and add that to the price."

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