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

[Blup85]

Curious. I'm guessing used Ev values go up ( or depreciation curve holds for a year) if tax deduct goes away?

 

[McRat]

Curious. I'm guessing used Ev values go up ( or depreciation curve holds for a year) if tax deduct goes away?

Yes. We already see a small bump in California used EV prices after the CA incentive disappeared for most buyers.

 

[Dr. J]

Curious. I'm guessing used Ev values go up ( or depreciation curve holds for a year) if tax deduct goes away?

Here's to hoping this discussion is all theoretical! I would hate to be called out on a bad prediction, but here goes....

I'm guessing new EV prices go down. The larger mfg'ers, like GM, are probably going to have inventory to clear and my guess is that Tesla will at some point (maybe toward year end 2018) reduce Model 3 prices to compete.

I've always thought that as the Tesla tax credit is reduced, Tesla will make small reductions in price to remain competitive with other EV mfg'ers still benefiting from the larger tax credit. But I'm terrible at predicting the future.

 

[daniel]

It is short sighted to spite the rich when everybody else suffers as a result. Your argument boils down to an assumption that the EV tax credit did not increase the EV penetration. That is far from obvious, yet alone proven.

When I got a tax break for buying my Prius, people were paying well over MSRP for them. The same number of cars would have been sold without the tax break. The half a million people on the reservation list for a Model 3 shows that demand for this car is so high that Tesla would sell every unit they can build for the next year even without the tax credit. It's not a matter of "spiting the rich" to say they should not get a tax break for buying a luxury car. They can afford it either way. It does not hurt them to pay full price.

(BTW, I consider myself rich, though I am nowhere near the 1%. Maybe I'm in the top 10%. I always vote for higher taxes, including higher taxes on myself, but I am not so altruistic as to pay more than the law requires, or to turn down tax breaks that are offered.)

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

Government subsidies for big corporations are even worse than subsidies for people to buy cars. But that's not the subject of this thread. The EV tax credit does not help Tesla because these cars will be sold regardless. All the tax credit does is increase demand for a car that will be in short supply for at least a year, and probably longer.

A tax break will help only after the demand is satisfied and the maker has the capacity to build more units than present demand. Then increasing demand helps. The tax break should not go to the early buyers (even though I'll be one of those). It should go to the people who buy the car after there is unsold stock on the lots that nobody wants to buy. That's the way to get more EVs on the roads and help the companies making them. (Though I think these cars will sell themselves and a better use of the money would be to put it into research to develop more efficient technologies such as better batteries and more efficient solar panels, which will make EVs and solar less expensive and more competitive in the long run after the initial demand by early-adopters has been met.

 

[Elena]

I wish Congress would give us more notice on these changes. Suddenly removing the tax subsidy may cause some to buy in now and not wait for their preferred model. The uncertainty may accelerate some home purchases or ev’s now, but result in buyers remorse if final legislation is changed.

 

[T34ME]

BIG OIL TRYING TO KILL THE EV MOVEMENT! Yes, I know this may come as a shock to some, but big oil is threatened by the EV movement and they are getting their lackeys in Washington to do their bidding in this budget bill. This is war against our future well being, health, energy independence, climate stabilization and for generations to come. #RESIST!

 

[MXFan]

“Tax credits are an important customer benefit that can help accelerate the acceptance of electric vehicles,” GM said Thursday. “Because General Motors believes in an all-electric future, we will work with Congress to explore ways to maintain this incentive...”

...after we screw Tesla over first.

 

[S3XY]

@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.

It's in the same article you linked to.

 

[Snow Drift]

“Tax credits are an important customer benefit that can help accelerate the acceptance of electric vehicles,” GM said Thursday. “Because General Motors believes in an all-electric future, we will work with Congress to explore ways to maintain this incentive...”

...after we screw Tesla over first.

Reality is the tax credit, unless extended beyond 200k cars, is of less value to Tesla. It is the other carmakers that need it. If they are being forced to build PHEV and BEV cars to meet CARB and CAFE requirements, they want the gov't to give consumers an incentive to buy their products.

My guess, is they will cap the price of the car or AGI of the customer. Just like in NY, you only get the full $2,000 POS Rebate if the car has >X range and is under Y price (i.e., MS and MX get a reduced rebate in NY due to being over $60k). This will promote the Bolt, Leaf and other models coming out in the next few years, while retaining the "middle class" tax break theme.

 

[T34ME]

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

Spoken like a true shortsighted, self interested oligarch whose children will have opportunities in that same public employees retirement system if they choose. I live in a community with many retired California public employees of different socio-economic backgrounds. Their public employment and retirement have allowed them to pull themselves out of the ghetto to a life of relative, middle class comfort. They purchase nice houses, they purchase nice cars, they shop at Trader Joes, and they pay Federal and State TAXES on that retirement income. Would you rather have them imprisoned in a ghetto and collect welfare subsistence and pay no taxes at all and not contribute to the economy in general? Some people just don't get it.

 

[tomas]

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

No problem. Stop the oil subsidies and we are all happy. Until then, don’t abolish the meager subsidies for clean energy.

 

[bkp_duke]

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

Best analysis of this tax proposal to date that I have found is here:
Details and Analysis of the 2017 Tax Cuts and Jobs Act - Tax Foundation

While there are costs of 1.5 trillion over first decade, that substantially drops in the second decade.

There is also the expected creation of almost one million jobs by the tax cuts.

Details and Analysis of the 2017 Tax Cuts and Jobs Act - Tax Foundation

 

[Jack6591]

Donald Trump and the republican party are doing everything they can to KILL innovation and American ingenuity.

When SpaceX proposed reducing the cost of Department of Defense contracts to provide launch services, Senator Sessions argued for the ULA "Russian Rocket" system.

Ask yourself why a sitting U.S. Senator would argue the case for spending more for Russian products.............for the American Department of Defense????

I did not vote for Comrade Trump nor his anti-American agenda.

 

[insaneoctane]

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.

It could be the point. If you were committed to buying the M3 but felt that the loss of the rebate put it out of reach, then the potential tax savings might help you justify choosing it anyway. If you were not committed and price was a big driver, I agree that the loss of the EV credit could easily sway you regardless of the tax bill savings

 

[bkp_duke]

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.

In theory this is a good idea, but the US is no longer the driving force behind EV adoption. That is China, and regardless of whether the US continues the EV incentive or not, auto makers will continue to develop EVs because China is the largest market and they have put down law requiring the transition of the automobile from ICE to EV.

While it would be great if the US follows suit, it is no longer in the drivers seat on worldwide adoption.

 

[bkp_duke]

When SpaceX proposed reducing the cost of Department of Defense contracts to provide launch services, Senator Sessions argued for the ULA "Russian Rocket" system.

Haven't seen this one, can you provide a link to read more? If true, this would be something I would write my congressman about.

 

[T34ME]

(BTW, I consider myself rich, though I am nowhere near the 1%. Maybe I'm in the top 10%. I always vote for higher taxes, including higher taxes on myself, but I am not so altruistic as to pay more than the law requires, or to turn down tax breaks that are offered.)

A sincere "thank you". I have faith that there are many of us who think like this who will drag the deplorables, kicking and screaming, into the future of a better society for all, rather than all about me.

 

[bkp_duke]

@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.

But wait, playing devils advocate here: the rich are the ones that pay the vast majority of those taxes. Why should they not get a proportional bit back?


As an owner of a company that stands to benefit from this tax cut, I can tell you right now I'm looking at ways to expand my business, including hiring more US-based employees, if this goes through. If it doesn't, I'll probably keep things as they are now.


Jut because I'm an exec with a large salary doesn't mean I don't see the bigger picture and want to hire more workers and improve the lives of my employees. The higher my taxes are, however, the less I do of that and the more I protect my "status quo".

 

[tomas]

Best analysis of this tax proposal to date that I have found is here:
Details and Analysis of the 2017 Tax Cuts and Jobs Act - Tax Foundation

While there are costs of 1.5 trillion over first decade, that substantially drops in the second decade.

There is also the expected creation of almost one million jobs by the tax cuts.

Details and Analysis of the 2017 Tax Cuts and Jobs Act - Tax Foundation

Sure. Do a “tax cut” that accelerates the deficit counting on “projected” job growth that will never happen - because companies will use the $ to further automate and Improve productivity... all in the year before midterms? Smells like buying votes to me.

 

[McRat]

In theory this is a good idea, but the US is no longer the driving force behind EV adoption. That is China, and regardless of whether the US continues the EV incentive or not, auto makers will continue to develop EVs because China is the largest market and they have put down law requiring the transition of the automobile from ICE to EV.

While it would be great if the US follows suit, it is no longer in the drivers seat on worldwide adoption.

I don't think the object of domestic policy should be to surrender our technology development faster than other countries.
I'm not sure how that helps America.

Ever wonder why the US is still competitive in the aerospace industry? A lot had to do with government programs. And why are we losing our ability to produce steel? The exact same reason. We will lose our aerospace advantage too if we decide to wage war on it and outsource more of it to China.

EDIT - Do you think China makes BETTER EVs than the US?