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Tax credits for electric cars are a classic income transfer to the rich - WSJ
Posted on 1/1/19 at 9:20 pm
Posted on 1/1/19 at 9:20 pm
quote:
The Electric Kool-Aid Subsidy Test
Tax credits for electric cars are a classic income transfer to the rich. Time to end them.
WSJ Editorial
President Trump’s recent blowup over General Motors layoffs was largely misdirected, though it may spur at least one good policy result. Killing subsidies for electric cars and trucks would be a victory for taxpayers, the federal fisc and the car industry.
Mr. Trump’s initial response to GM’s plant closure news was to threaten to punish the company by stripping its federal subsidies. White House economic adviser Larry Kudlow later acknowledged that Mr. Trump can’t legally single out GM for subsidy retribution. Instead the White House may take the better route of proposing to eliminate subsidies for electric vehicles, in particular the $7,500 consumer tax credit for battery-powered cars.
That handout began as part of the Obama 2009 “stimulus,” and as always supporters said it would be temporary. A decade on, GM, Nissan and Tesla are nearing or exceeding the 200,000-per-manufacturer cap on EV sales that qualify for the full credit. So they are now seeking increases in the cap, joined by other car makers and Democrats preaching climate alarm.
The credits are a classic middle-class-to-rich income transfer. EV batteries are expensive, which means the average starting price for electric cars is around $42,000. That’s some $8,000 more than the average price of a new vehicle, and $22,000 more than the average price of a new gasoline-powered small car.
Wayne Winegarden of the Pacific Research Institute looked at 2014 IRS data and found that 79% of federal EV tax credits were claimed by households with adjusted gross income of more than $100,000. Only 1% of EV buyers earned less than $50,000.
Some states and localities also hand out EV breaks, allowing consumers to reap up to $15,000 (California) or $10,500 (Connecticut) per car. This means the federal program is also a geographic wealth transfer, benefiting mainly wealthy coastal havens. The latest sales data from August shows that 53% of EV sales were in California. The subsidy will cost some $2 billion through fiscal 2019. And taxpayers will also have shelled out another $5.5 billion directly to car makers in federal grants and loans for manufacturing and technology programs by 2019, according to the Winegarden data.
Yet this largesse has not changed the economics of the electric car market. Despite advances in EV technology and all of this government support, most auto makers sell their electric vehicles at a loss. A 2016 Bloomberg News story reported that GM could lose as much as $9,000 on every Chevrolet Bolt.
Automakers stick with these EV losers because nearly a dozen states have adopted mandates requiring that EVs make up a certain percentage of all vehicle sales. Even then, most consumers need coaxing to buy. When Georgia ended its $5,000 state tax credit in 2015, sales of electric vehicles fell 89% in two months. EVs have been on the market since 2010 and are still only about 0.5% of total vehicle sales.
Auto makers worry that without federal subsidies the state EV mandates may make EV production financially ruinous. But then states should end the mandates, or they can pick up the federal $7,500 tab.
As for climate change, studies show that total CO2 emissions from EV cars can even exceed those of conventional gas vehicles—depending on what fuel is producing the electricity to charge the batteries (coal) and how long a car battery charge lasts.
Full editorial at link.
Is it time to phase this out? Could companies like Tesla survive this? Is it wise for the US to develop the electric car industry using permanent tax credits this generous?
This post was edited on 1/1/19 at 9:23 pm
Posted on 1/1/19 at 9:24 pm to goofball
quote:
As for climate change, studies show that total CO2 emissions from EV cars can even exceed those of conventional gas vehicles—depending on what fuel is producing the electricity to charge the batteries (coal) and how long a car battery charge lasts.
Electric cars allow owners to shift the pollution from their tailpipe, to that coal plant, just over the state line.
This is very popular in places like California, where people choose to believe that they’re helping the environment.
It allows them to feel both smug, and virtuous.
While not being particular virtuous.
This post was edited on 1/1/19 at 9:26 pm
Posted on 1/1/19 at 9:25 pm to goofball
Most green "subsidies" are give aways to the rich, considering the rich are more likely to purchase environmentally friendly products.
Here is an ever bigger income transfer to the rich: free college. Wealthy and upper middle class children are far more likely to attend college than poorer students, so tax dollars would be paying for rich families to send kids to school.
Here is an ever bigger income transfer to the rich: free college. Wealthy and upper middle class children are far more likely to attend college than poorer students, so tax dollars would be paying for rich families to send kids to school.
Posted on 1/1/19 at 9:26 pm to Lima Whiskey
quote:
Electric cars allow owners to shift the pollution from their tailpipe, to that coal plant, just over the state line.
I never understood why coal is shipped down from Ohio, Pennsylvania, and West Virgina to be burned in a plant in Pointe Coupee Parish while our natural gas is shipped up north.
Horseapples.
Posted on 1/1/19 at 9:27 pm to HailHailtoMichigan!
So many of the Democrats, ostensibly populist measures, are designed to help their richest supporters.
Posted on 1/1/19 at 9:31 pm to goofball
Coal is cheap, but yes.
On a large scale, this becomes truly immoral.
On a large scale, this becomes truly immoral.
Posted on 1/1/19 at 9:31 pm to goofball
quote:
Some states and localities also hand out EV breaks, allowing consumers to reap up to $15,000 (California) or $10,500 (Connecticut) per car.
There is some extreme wealth in parts of California and Connecticut.
Posted on 1/1/19 at 9:32 pm to goofball
quote:
Killing subsidies for electric cars and trucks would be a victory for taxpayers
Killing subsidies period would be a victory.
Posted on 1/1/19 at 9:38 pm to goofball
We're considering buying the Prius Prime, which is eligible for about $7000 in credits. If only it wasn't hideous...
Posted on 1/1/19 at 9:42 pm to Yat27
quote:
We're considering buying the Prius Prime, which is eligible for about $7000 in credits. If only it wasn't hideous...
It's a really ugly car.
Posted on 1/1/19 at 9:42 pm to Yat27
quote:
Prius Prime
You will turn into a fricktard. Don’t do it. The economics of it will never be justified.
This post was edited on 1/1/19 at 9:43 pm
Posted on 1/1/19 at 9:44 pm to Aubie Spr96
Don’t frick with my Farm Tax Credit though because I love my Range Rover and Porsche Cayenne deductions!!!!!!
The two best pieces of farm equipment any business owner can buy.
The two best pieces of farm equipment any business owner can buy.
This post was edited on 1/1/19 at 9:48 pm
Posted on 1/1/19 at 9:46 pm to CDawson
quote:
You will turn into a fricktard. Don’t do it. The economics of it will never be justified.
We probably won't, but the credit basically cuts 25% off the price, and my wife's commute is about 20 miles total. It has an electric range of 25 miles.
Posted on 1/1/19 at 10:01 pm to Yat27
quote:
It has an electric range of 25 miles.
WTF? That is horrendous and GOD knows how long it takes and costs to charge. There is a reason all this alternative energy is inefficient and a rip off and i am a fan of all energy. I had read somewhere that most electric vehicles could get 100 miles per charge but after so many miles (e.g. 50k) the battery charge is cut in half cutting distance in half. supposedly they were working on a car that could go 300 miles on a charge.
Posted on 1/1/19 at 10:05 pm to Fat Bastard
It's a plug-in hybrid. The battery lasts 25 miles, then it operates like a regular Prius using gas/hybrid technology.
The target consumer has a short work commute, or a charger at work. My wife's company has free chargers for employee use.
The target consumer has a short work commute, or a charger at work. My wife's company has free chargers for employee use.
This post was edited on 1/1/19 at 10:09 pm
Posted on 1/1/19 at 10:31 pm to Yat27
quote:
It's a plug-in hybrid.
ok that makes more sense
quote:
The target consumer has a short work commute,
absolutely
Posted on 1/1/19 at 10:51 pm to Yat27
quote:So like a Volt, but not as good?
The battery lasts 25 miles, then it operates like a regular Prius using gas/hybrid technology.
Posted on 1/1/19 at 10:55 pm to goofball
Good thing I got my model 3 on the 31st. Thanks for the car guys.
Posted on 1/1/19 at 10:56 pm to dewster
quote:
So like a Volt, but not as good?
I guess, but it's also a lot less expensive.
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