Biden/Harris Tax Credit

[SageBrush]

Any tax credit issued by a new administration that applies to Tesla will just be unfair... but I will take it!

Me too.

My city has a large fraction of the population that lives paycheck to paycheck. That is not unusual, I just mention it to say that my following observations are local --

That large group does not in general buy new cars. Tax credits for new cars are fairly irrelevant where they are concerned. I now see Prius driving around the poorer areas, and it is not because that group are now greenies. It is because the Prius is cheap, gets good fuel economy, and is reliable. Part of what makes it cheap today is that 10 years ago Prius had outsized marketshare due to tax credits and/or deductions.

So while it is not politically correct to support free money to the top 20th percentile, that is where the government can influence car purchasing choices.

 

[ItsNotAboutTheMoney]

Me too.

My city has a large fraction of the population that lives paycheck to paycheck. That is not unusual, I just mention it to say that my following observations are local --

That large group does not in general buy new cars. Tax credits for new cars are fairly irrelevant where they are concerned. I now see Prius driving around the poorer areas, and it is not because that group are now greenies. It is because the Prius is cheap, gets good fuel economy, and is reliable. Part of what makes it cheap today is that 10 years ago Prius had outsized marketshare due to tax credits and/or deductions.

So while it is not politically correct to support free money to the top 20th percentile, that is where the government can influence car purchasing choices.

To be fair, that "free money" is actually their money. The top 25% earners pay over 75% of personal income tax.

 

[Hydrocarbon302]

Tesla’s are good enough to not require a tax credit.

 

[alloverx]

Make the credit $10,000 and have it apply to cars under $40,000.
Ideally have a credit of $5000 on used cars less than $20,000 and older than 3 years.

Ideally the credit would only be available to folks making less than the state median income; might also need an asset test to be fair.
In a perfect world these credits would be at POS.

And yes, bump the gas tax by 5/10cents every year with the money dedicated to transport aims or to undo the damage of gas usage.

Like others have said, a standard charging (CCS? in the US) system would be nice too.

 

[David_Cary]

What percentage of new cars are purchased by those making less than the state median income?
All actions have consequences - the wise use of what you are proposing is for rich folks to buy their college student children new EVs. The next thing would be for people to buy EVs and sell them. Now that one has a rule against it but all rules have limits. The current rule says that you can't "intend" to do it. Right - try proving intent.
Next would be criminals who don't have taxable income or others that have large "off-the-books" income. And then retirees who can hold on stock withdrawals for a year (the intent of your asset test - good luck with that - how about I hold it in a trust?)
These groups in totality would likely buy more cars with a credit than all others combined.
And that is just off the top of my head - I am sure there are other cases.
Even the TC as written is a problem. Tesla will weather it but it puts them at an unfair disadvantage compared to laggards or other new car companies.
The most logical thing is to make gas more expensive and 5 cents a year is a joke.
Next most logical thing is to rewrite the TC with an overall sunset not manufacturer dependent. The sunset should probably be something significant like 10,000,000 cars. I could be onboard with a scale down based on car price. Hard limits just encourage things like Tesla's game in Canada where they sold cars for just under the limit with software limits that were disabled after purchase for a price. This encourages FSD models. Maybe even battery rental models. Perhaps some legal limited warranty with post purchase options.
Tesla could sell a Model 3 for $25k with enough games.

 

[ArizonaP85]

When a person changes jobs during the year, the worker might earn beneath the threshold for withholding Social Security and Medicare on each job, but exceed the threshold when the wages are combined.

If this is a credible suggestion (I’m not enthused) it would be more effective if the SS and Medicare were withheld at the source and then refunded when returns are filed.

And the Earned Income Credit (on the books since Tricky Dick’s Administration) effectively does this already.

When a person changes jobs during the year, the worker might earn beneath the threshold for withholding Social Security and Medicare on each job, but exceed the threshold when the wages are combined.

If this is a credible suggestion (I’m not enthused) it would be more effective if the SS and Medicare were withheld at the source and then refunded when returns are filed.

And the Earned Income Credit (on the books since Tricky Dick’s Administration) effectively does this already.

Social Security and Medicare are already withheld at each job but excess SS withholdings ARE refunded when file year end tax return.

2020 Social Security withholding limit is $137,700. There is no income limit on the 1.45% Medicare withholding:

https://www.ssa.gov/news/press/factsheets/colafacts2020.pdf

Pedantic point: Earned Income Tax Credit passed in 1975, a year after Tricky Dick resigned.

 

[SageBrush]

To be fair, that "free money" is actually their money.

Whatever

Just like the oil companies are not benefitting from subsidy, they are just keeping more of their own money. </sarcasm>

 

[ItsNotAboutTheMoney]

Whatever

Just like the oil companies are not benefitting from subsidy, they are just keeping more of their own money. </sarcasm>

Not comparable.

Tax credits are not free money, particularly if you're in a higher economic group who pays a higher rate of tax due to the progressive taxation system. The choice is between not taking the tax credit and it costing you money, or buying an expensive vehicle and it costing you a bit less money because of the tax credit.

 

[Uncle Paul]

California already charges $1.00 more than neighboring states for gasoline & diesel. That $ was supposed to be used for road maintenance and bridge infrastructure projects. Instead it has been funneled into pet legislature projects like light rail, trollies and the infamous high speed rail project that has turned out to be a giant cash dump and slush fund.

Instead of using the tax $ to make things better for travelers it has been transfered into "feel good" projects and to influence wealthy donors.

Tesla has used the legislated carbon credits they earn to invest in Model 3/Y roll outs. At least here the carbon taxes will reduce the # of gass guzzlers on the road.

 

[ArizonaP85]

California already charges $1.00 more than neighboring states for gasoline & diesel. That $ was supposed to be used for road maintenance and bridge infrastructure projects. Instead it has been funneled into pet legislature projects like light rail, trollies and the infamous high speed rail project that has turned out to be a giant cash dump and slush fund.

Instead of using the tax $ to make things better for travelers it has been transfered into "feel good" projects and to influence wealthy donors.

Tesla has used the legislated carbon credits they earn to invest in Model 3/Y roll outs. At least here the carbon taxes will reduce the # of gass guzzlers on the road.

California’s 62 cent gas tax is 24, 29 & 42 cents higher than surrounding states’ (Oregon, Nevada & Arizona) gas taxes. Not $1 more.
How High Are Gas Taxes in Your State?

 

[SageBrush]

Instead of using the tax $ to make things better for travelers it has been transfered into "feel good" projects and to influence wealthy donors.

The taxes have not been used the way you want them spent, but they have been spent on transport, and to a large degree on public transport.

 

[Uncle Paul]

Thats what I mean. The gas taxes should be going to support transportation for the vehicles that pay the tax. Not spent on public transportation pet projects. Diverting the paid taxes to other pet projects does not benefit those that pay the tax.

 

[ArizonaP85]

Thats what I mean. The gas taxes should be going to support transportation for the vehicles that pay the tax. Not spent on public transportation pet projects. Diverting the paid taxes to other pet projects does not benefit those that pay the tax.

The idea is more mass transit=less pollution for everyone to breathe AND less congestion on the roads which would directly benefit drivers paying the gas tax (faster trips, better fuel economy, etc.)
You Californians can argue about whether it is fair or if those effects are being observed, but you shouldn’t deny the existence of the theory on which it is based.

 

[SageBrush]

Thats what I mean. The gas taxes should be going to support transportation for the vehicles that pay the tax. Not spent on public transportation pet projects. Diverting the paid taxes to other pet projects does not benefit those that pay the tax.

I have news for you: the vehicle fuel taxes do not come close to paying for your pet roads, let alone the associated policing and safety/health costs. The federal contribution and debts the current vehicle population have foisted on future generations is enormous. Where is your rage over those misappropriations ?

 

[imola.zhp]

I realize Corona is going to be the primary focus of the incoming administration elect, but do we think the credit will be extended within the first year? I'd like to purchase early 2021 and hope for the credit when I do my 2022 taxes.

 

[SageBrush]

I realize Corona is going to be the primary focus of the incoming administration elect, but do we think the credit will be extended within the first year? I'd like to purchase early 2021 and hope for the credit when I do my 2022 taxes.

You, and every other CPA wannabe.
I took it a step further and enticed my wife with the thought of selling our Model 3 slightly before the tax credit is renewed. You know, that information is power motto.

In general, it seems like it takes 1 -3 months for the wider business/consumer community to catch on to these types of leverage/hedging opportunities.

 

[imola.zhp]

You, and every other CPA wannabe.
I took it a step further and enticed my wife with the thought of selling our Model 3 slightly before the tax credit is renewed. You know, that information is power motto.

In general, it seems like it takes 1 -3 months for the wider business/consumer community to catch on to these types of leverage/hedging opportunities.

Yes, if I currently owned a Model 3 I would dump it right now while used car prices are INSANE and pick up a new car in 2021.

I sold my i3 in late June for a crazy amount, I can't help but wonder if I would have gotten more if I had waited until July, August, etc. Oh well, no more lost sleep over possible plastic motor bracket cracks or metal AC fan shards in the battery pack.
/off topic

 

[MZL23]

Does anyone know when we will get the actual word on this? Not speculation.

 

[SageBrush]

Does anyone know when we will get the actual word on this? Not speculation.

Of course.

As soon as it passes committee and is voted on by both houses of congress.

 

[MZL23]

Of course.

As soon as it passes committee and is voted on by both houses of congress.

Thanks. I get that but is there a time frame?