GOP tax reform bill would end the $7500 EV tax credit (and other tax related grousing and grumbling)

[C141medic]

I will happily take any tax breaks they give me, but:

Tax breaks are a bad way to implement policy because it's too difficult to assess the cost:benefit ratio. And tax breaks for the things that rich people do (such as buying $75,000 cars) just transfer money from the poor to the rich. Tesla has so many people waiting in line to buy the Model 3 that it will take them over a year just to clear the waiting list as it stands now, and if the car is as good as I fully expect it to be, they will sell every car they can turn out for several years to come. So what public policy goal is served by giving tax breaks to the buyers?

The same thing happened with the Toyota Prius. I got a tax break when I bought mine, at a time when Toyota could not meet the demand. Every unit they could turn out was sold before it was built. So what public policy goal was served by the tax break?

Instead of tax breaks for people who buy cars that are in short supply anyway, tax breaks that reduce government revenues, we should have a hefty tax on carbon, which will incentivize burning less fossil fuel and increase government revenue.

I sympathize with the folks whose financial situation is such that they cannot afford the car they want unless they can get the government to pay $7,500 of the price for them. But I have a lot more sympathy for the folks who cannot afford rent on an apartment, or who, having paid their rent, have no money left for food, and for the folks who cannot afford health insurance.

We need to switch from gas to electric transportation, but giving tax breaks to car buyers is the wrong way to do it. Any new car is a luxury item, and luxury items should never be subsidized. Putting that money into research on battery technology, or into sustainable power generation would be a better use of the government's dollars.

I think you’re missing the point in people receiving a subsidy ($7500) for purchasing an EV. The reason the government is giving you a credit is to encourage you to purchase an EV. Has nothing to do with being rich or poor. If I recall, a few months ago Nissan was offering new 2017 Leafs for a ridiciously low price of 12 or 14K (can’t remember the exact amount) after all rebates/incentives. Would you consider that a “luxury” purchase? And what about our government subsidizing banks, oil companies, etc? In my opinion giving a credit for an EV purchase/ lease is one of the better kind of subsidies. Here’s an interesting article: How do Electric Vehicle Tax Credits Work? A Tax Analyst Says How to Take Advantage | Inverse

 

[Dr. J]

I doubt it, but let's get some data to solve the issue!

Edit: And of course, the Tax Foundation gives a totally opposite view. 62.51% of returns in the $200K-$500K group are subject to AMT vs. 43.83% of returns in the $500K-$1 million. {shrug}

Looks like I'm wrong, see here: The Alternative Minimum Tax Sweet Spot. It all depends, of course, but it's logical that the point of highest impact of the AMT is around $500,000.

 

[Chopr147]

The income groups are poorly chosen. I'm willing to bet that the 400k income group is more likely to be subject to /AMT than the 900k group.

Remember the AMT is not just about income. It is also about high tax deductions. This is the reason I and many others in NY (like other expensive states) get hit with it. Mortgage interest, state taxes etc...... are what puts me over the top in the AMT equation. Each year I do my taxes it's the same thing. "oh you would get back $4,000 but because of AMT you owe $3000." Frustrating.


The $7500 "incentive" was a good program but as one other poster said "do we need it anymore?" $150,000 Tesla's sell w/o it. Some EV's are selling themselves just fine. (Bolt not included) But IMHO that's Chevy's fault, not a credit.

 

[MarcCBR]

At the risk of getting "pounded" here: How bad is it if the "Federal Tax Credit" gets revoked? Wont that level the playing field that ICE companies (although most of them are heading towards EV or Hybrids anyway) complain about all the time?? Incentives will always be seen as a form of government intervention in business, and we (at least me) don't want/need that.

The tax credit was leveling the playing field. If you want to completely get rid of any incentives, you need to get rid of the EV tax credit and the billions in in tax incentives that the oil industry receives every year. Allow the price of oil to climb to what it should be then we will have a level playing field. Of all forums if figured people from this forum would now this.

 

[McRat]

It is interesting to see how many people misunderstand why they have merit scholarships or EV incentives.

You are trying to improve the future of the US.

By giving incentives for EV production, US companies will develop better EVs, sooner, and cheaper. It doesn't matter WHO buys them, as long as there are buyers. And incentives are a proven mechanism to create more buyers.

 

[Tonymil]

A lot of you seem to forget that tax incentives are used to level the playing field. How much was solar just a decade ago? Now its cheaper than all other sources of energy. These are the same arguments people made 2-3 decades ago about solar being more expensive and less efficient then fossil fuels. Incentives are a good thing, just because EV are getting cheaper doesn't mean we're there yet. We need tax incentives to further drive innovation and cost down so that the average working middle class can afford these things.

If the EV credits are phased out sooner, that means people will choose to buy gas guzzlers over EVs.

You hit it exactly right. The subsidy was put in place to support new technology that would reduce CO2 emissions. Any tax subsidy is going to be flawed and include some inefficiency, but here's what some studies have to say about the federal ev tax credit, as summarized in Wikipedia:

"A 2016 study conducted by researchers from the University of California, Davis found that the federal tax credit was the reason behind more than 30% of the plug-in electric sales. The impact of the federal tax incentive is higher among owners of the Nissan Leaf, with up to 49% of sales attributable to the federal incentive. The study, based on a stated preference survey of more than 2,882 plug-in vehicle owners in 11 states, also found that the federal tax credit shifts buyers from internal combustion engine vehicles to plug-in vehicles and advances the purchase timing of new vehicles by a year or more."​

Government incentives for plug-in electric vehicles - Wikipedia

 

[Tonymil]

You're welcome to go debate the squishy "goodness" and how this tax bill makes you feel and it's societal impacts with someone else.

Squishy. You Keep Using That Word, I Do Not Think It Means What You Think It Means.

 

[Barklikeadog]

It is interesting to see how many people misunderstand why they have merit scholarships or EV incentives.

You are trying to improve the future of the US.

By giving incentives for EV production, US companies will develop better EVs, sooner, and cheaper. It doesn't matter WHO buys them, as long as there are buyers. And incentives are a proven mechanism to create more buyers.

The gov't should not be in the business of picking winners and losers. I don't believe that the gov't should be subsidizing oil, banks, etc

maybe next year congress should give subsidies for some other tech like hydrogen, they could deem electric vehicle as being dirty and put hefty fines on electric vehicles.
Then you will cry foul. it's all about perspective. is Ford getting a tax credit for spending billions on aluminum vehicle production to gain an extra mpg to be 'cleaner'?

/rant

 

[Pinot.Noir]

I don't know why they can't let it expire as designed. What difference, at this point, will it make? (how many more vehicles will it impact?)

Because they need a specific spending goal to avoid a democratic block via a filibuster.

 

[SageBrush]

Because they need a specific spending goal to avoid a democratic block via a filibuster.

More specifically, the proposed law cannot be estimated to cost more than 1.5 trillion over 10 years

 

[HopeToGolf]

I am not an EVangelist so this $7500 matters. I want to support EV but I like many different types of cars. I like the M3 and I am willing to give it and Tesla a shot at a price. That said, eliminating the $7500 takes away one advantage the M3 had vs. the other vehicles I am considering.

I have to go back to the pricing but if IIRC I planned to buy a car that was close to $60K before the rebate and if that is where I am now after tax reform, the M3 is going to take more heat from the ICE cars I am looking at. At $55k-$60k the first model year M3 isn’t a slam dunk for me.

 

[T34ME]

I'm a facts and data kinda guy. While I'm as irritated as anyone about the proposed removal of the EV tax credit, has anyone actually compared their taxes both BEFORE and AFTER the proposed bill? I did and it was significant. As a matter of fact, it would be financially smarter for me to choose the proposed bill without EV credits vs leaving things the way they are currently (not necessarily due to 1 tax year of savings, but certainly over multiple). Additionally, the new tax bill would promote me to no longer itemize my return, so my taxes would also be much much simpler. So, I'd invite folks to plug their numbers in to the calculator and see the difference between current tax code and proposed and see what (if any) savings they might get. Maybe it takes a few tax years, but if you got the equivalent of the EV credit, you may have options. Since I'm only a single data point, please share any results/findings you discover.
Here's the calculator

PS- I still want the EV tax credit to be left intact! Maybe we could do the tax bill as is AND put the EV credit back in?

It's all about me, me, me. America is a doomed society when the culture can't see beyond themselves, they can't even see what is best for their children's future. SAD! I don't care what the calculator says. I live in California, one of the highest tax locations in the US, but I get so much more by living here. I'm not moving and I'm not supporting this regressive tax bill. #RESIST!

 

[gregincal]

This will be my last post with @Tonymil on this subject. I purposely chose not to address the subjective portion of your issue and chose to stick to the non-subjective issue that I originally brought up. You're welcome to go debate the squishy "goodness" and how this tax bill makes you feel and it's societal impacts with someone else. My single, sole, and only point was to suggest folks should evaluate the math for themselves. This was particularly relevant if it was influencing their decision to cancel/not buy the M3 due to the loss of the EV credit. While your Santa Claus argument is cute, I'm pretty sure we're not going to make any headway discussing fiscal policy in this forum! I will suggest that some people believe cutting taxes can increase net revenue when growth is considered. Move on, nothing to see here.

So the tax break may save you a lot of money. It still makes the Model 3 more expensive relative to ICE cars. One can take the money, save it and still buy another car, the one thing doesn’t really have to do with the other. So how much you save on the tax break isn’t really the point.

 

[T34ME]

Would you rather have a $7500 one-time tax incentive now, or say $2500/year more take-home income?

I would rather people get the $7,500 tax credit now to kick start the EV movement by ALL automakers. The additional $2,500 per year take home will not cover all the future increase in taxes and personal expenses caused by the cost of cleanup to our environment by sticking with ICE.

 

[SageBrush]

@insaneoctane
I don't find it particularly useful to read anecdotes of winners and losers -- surely both will exist.

The overall effect though is worth knowing: of the 1.5 trillion tax cut over the next 10 years, 85% will flow to the rich and to corporations, while 15% will flow to individual taxpayers*, primarily the middle class. This is the latest analysis as of yesterday. I find this to be fairly obscene, but ymmv.

*the rich are individuals as well obviously, but I think they are separated out as the top 1% of incomes.

 

[RubberToe]

It's all about me, me, me. America is a doomed society when the culture can't see beyond themselves, they can't even see what is best for their children's future. SAD! I don't care what the calculator says. I live in California, one of the highest tax locations in the US, but I get so much more by living here. I'm not moving and I'm not supporting this regressive tax bill. #RESIST!

Well said, +1000

RT

 

[Dr. J]

I'm a facts and data kinda guy. While I'm as irritated as anyone about the proposed removal of the EV tax credit, has anyone actually compared their taxes both BEFORE and AFTER the proposed bill? I did and it was significant. As a matter of fact, it would be financially smarter for me to choose the proposed bill without EV credits vs leaving things the way they are currently (not necessarily due to 1 tax year of savings, but certainly over multiple). Additionally, the new tax bill would promote me to no longer itemize my return, so my taxes would also be much much simpler. So, I'd invite folks to plug their numbers in to the calculator and see the difference between current tax code and proposed and see what (if any) savings they might get. Maybe it takes a few tax years, but if you got the equivalent of the EV credit, you may have options. Since I'm only a single data point, please share any results/findings you discover.
Here's the calculator

PS- I still want the EV tax credit to be left intact! Maybe we could do the tax bill as is AND put the EV credit back in?

@insaneoctane, this calculator text states the standard deduction is doubled to $24,400 for MFJ couples, but in fact it is *nearly* doubled to $24,000 (same error for MFS/single-filer standard deduction). The rest of the text appears to be accurate. Do you have any idea who created this calculator and why we should think it's accurate?
One caution about extrapolating comparisons (vs. the current tax code) to future years: the new family tax credit expires after 5 years (GOP tax plan may offer little aid for many in middle class). The bill also changes the inflation adjustment for tax brackets from CPI to chained CPI, which is expected to push taxpayers into higher brackets slightly faster (my source for this is "I read it somewhere but can't find it now"). YMMV. Over time.

 

[Barklikeadog]

It's all about me, me, me. America is a doomed society when the culture can't see beyond themselves, they can't even see what is best for their children's future. SAD! I don't care what the calculator says. I live in California, one of the highest tax locations in the US, but I get so much more by living here. I'm not moving and I'm not supporting this regressive tax bill. #RESIST!

The future of California's children will be to support the public employee pension disaster.

 

[McRat]

... I live in California, one of the highest tax locations in the US, but I get so much more by living here. I'm not moving ...

Ahhhh... You must be on the Freeway right now!

So Cal Edison businesses as of July were pretty much forced to stop EV charging due to the new tariffs thanks to Jerry Brown and Friends.

I'm not moving either, but I don't fear Washington DC. My enemy is much, much closer to home. I live in a state that hates businesses and bases most of it's decisions on diversity issues. We lack effective national representation, our schools are going into the toilet, our infrastructure is collapsing but instead of doing anything about it, Jerry and Friends are spending millions to try and wage war against the White House and California Businesses. And we just received a bigger bill for ammo.

No EV rebates here, except for people who either lie about their taxes, or really cannot afford a new EV.
Promised and funded EV infrastructure halted.
Ultra high L2 charging tariffs for businesses were just approved.
Extra registration fees voted in for EVs.
Millions spent on refueling H2 cars that don't exist and nobody wants, even with $5000 rebates.
The largest Green House Gas disaster in the US happened here recently. California gas leak was the worst man-made greenhouse-gas disaster in U.S. history, study says

We have Politicos who talk the talk better than anybody. Well funded, articulate, but dumb as rocks when it comes to technology issues.
I suppose they want to do good, but they usually screw that up due to ignorance. One of the leading CARB scientists here who wrote a paper that defined air pollution bought his diploma mail-order like a Russian bride. But the 'bride' screwed environment, not just the 'scientist'.

Some have already heard my thoughts on California's ineffective eco-posturing. We USED to be #1 in air pollution research, and we certainly spend the money (we have random smog checks set up on roadways and the toughest punishments for offenders in the US), but we lost our way. We allowed companies like Toyota and the fossil fuel industry to be our pimps and whore us out for a buck.

When you hear of the silliness going on in our Universities, ($750,000/yr public employees, bans on free speech), they are nothing compared to the failure of CARB today.

 

[Dr. J]

The future of California's children will be to support the public employee pension disaster.

Uh, wasn't PA the place where the capital city filed for bankruptcy a few years back? Just sayin', we all got our problems.