It’s happening quickly. The rationalizations for upcoming policy changes being publicized in advance by various interested parties. Today, I came across two groups interested in stopping the current $7,500 tax break for electric cars. Yes indeed, in reality it has benefited some folks who are a bit better off than others, but in addition to Teslas, there have been quite a few Leaf, Sparks, Rava4, Kia (and others) sold. The industry is nascent — particularly in the States.
The first group is reported on in the Weekly Standard:
A new group called the Energy Equality Coalition launched on Thursday. The group's goal is to "end taxpayer subsidies and ensure a level playing field for middle-class American energy consumers."
For now, the group is starting with a focus on electric cars, but sources close to the group tell THE WEEKLY STANDARD that the group could expand its focus to other subsidies, particularly ones that disproportionately benefit the wealthy. The impending extension of current tax subsidies helped prompt the group's formation. In the short term, the goal is building a grassroots list of those opposed to such subsidies, and the end goal is dismantling them.
It then goes on to make and appeal to the working class :
George Landrith is President and CEO of Frontiers of Freedom, and he serves on the board of the Energy Equality Coalition. He tells THE WEEKLY STANDARD:
"Working-class people are paying taxes to subsidize luxury goods for the richest among us. That's wrong and needs to stop. So we're launching the Energy Equality Coalition to raise awareness about this imbalance and end the subsidy behind it. We believe there should be energy equality, not special treatment for the wealthy."
Pardon me while I……
The second group has a link below and
Despite the endless hype about electric cars, vehicles that plug into the grid remain a niche product that is sold almost exclusively to the affluent. For instance, the average buyer of a Tesla, the most popular electric vehicle in the U.S., has an average household income of $293,000. A 2015 study by Severin Borenstein and Lucas Davis of the University of California at Berkeley found that 90% of federal EV tax credits are claimed by buyers with incomes in the top 20% of taxpayers. Buyers of a Tesla, or other EVs, are entitled to a $7,500 federal tax credit. In 2015, U.S. sales of EVs and plug-in hybrid vehicles totaled 116,099 units, or 0.6% of the 17.5 million cars and light trucks sold. Put another way, in 2015, Ford Motor Company sold as many F-150s and other pickups every eight days as Nissan sold Leaf EVs in the entire year. The EV subsidy will have virtually no impact on America’s need for oil, either. A 2012 analysis of the federal EV tax credits by the Congressional Budget Office concluded that the subsidy will “result in little or no reduction in the total gasoline use and greenhouse gas emissions of the nation’s vehicle fleet.” There is no economic or environmental justification for the EV tax credit. Motorists purchase the vehicles that suit their needs. Lower-income taxpayers should not be subsidizing wealthy motorists who buy EVs.
There is no question Tesla sells to the wealthy but they are also pushing a technological envelope that will clearly have benefits elsewhere. Chevy has just released a “Bolt” that has a 238 mi range and you can get for $38k minus $7.5k Fed and $2.5k California rebate. This is starting to work for much larger population and now the punch bowl is going to be taken away. Without the subsidy, particularly for companies controlling leasing, manufacturers are going to lose interest in this.
The incoming administration/Republican House can kill it two ways, 1) Rewriting the tax code in a couple of weeks to get rid of it; 2) Let the current program expire and not renew it.
I see this as a very, very shortsighted idea.
Links:
www.weeklystandard.com/…
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