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

[abasile]

that's an issue for Canadians and irrelevant to this discussion

Canadians kvetching about carbon taxes of $0.07CAD/liter is relevant here because it illustrates the antipathy that many North Americans have toward putting even a small price on carbon. Here in California, politicians are making an issue out of our $0.12/gallon gas tax increase that just went into effect.

I would be more okay with hastening the end of the $7500 EV credit if our elected representatives were simultaneously working toward a carbon tax. What happened to the days when the GOP championed the cause of individual responsibility? If you pollute, you should have to pay, not just push off the problem on everyone else.

 

[kort677]

Canadians kvetching about carbon taxes of $0.07CAD/liter is relevant here because it illustrates the antipathy that many North Americans have toward putting even a small price on carbon. Here in California, politicians are making an issue out of our $0.12/gallon gas tax increase that just went into effect.

I would be more okay with hastening the end of the $7500 EV credit if our elected representatives were simultaneously working toward a carbon tax. What happened to the days when the GOP championed the cause of individual responsibility? If you pollute, you should have to pay, not just push off the problem on everyone else.

it is a severely flawed concept and it is severely off topic.

 

[ohmman]

it is a severely flawed concept and it is severely off topic.

It is not remotely off topic, since an EV incentive intends to level the playing field in the opposite way that a carbon tax does. Oversimplifying here, but one is an incentive to do something, the other's an incentive to not do the other thing.

 

[insaneoctane]

Sometimes it's hard to tell if someone is really missing the point or just pretending. I mentioned both that there are persons who will individually lose under the tax proposal. Do you really dispute that or do you believe in Santa Claus - presents for everyone! Second, I mentioned that society loses. Did you intentionally or unintentionally fail to address that point? How can we afford the budget deficit that this bill would cause? Again, do you believe that somehow cutting taxes raises revenue - another gift from Santa Claus? Stop looking in the mirror and start looking out the window. There's a whole world out there you know.

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.

 

[SageBrush]

What about people who make a living from investment and dividend income? Should they be subject to self-employment tax? While it's treated differently for tax purposes, rental income is at its essence a form of dividend income, or so it seems to me.

The difference is that rental income requires work, either from the owner or a contracted company. Maintenance, repairs, tenant issues ... ... the list is long. That part of the rental income is pretty easily viewed as wages if it is performed by the landlord.

 

[vinnie97]

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?)

 

[daniel]

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.

 

[d21mike]

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.

Very well said. I have been discussing this with my grown kids. I passed on your quote.

 

[insaneoctane]

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?)

Do the math. The government does not save much from Tesla because they have already paid most of the subsidy out for them. The savings are primarily with the other manufacturers. At $7,500 X 200,000 that's $1.5B with a "b" per manufacturer. I do think with some better restrictions, the subsidy would be useful, ought to stay and just be phased out over the next few years. But, no one is really asking me

 

[Dr. J]

Repeals the Alternative Minimum Tax: The AMT, originally intended to ensure the richest tax filers pay at least some tax by disallowing many tax breaks, most typically hits filers making between $200,000 and $1 million today.

This is misleading, the "most typically hits" part. From the Tax Policy Center:

"In 2017, 29.4 percent of households with “expanded cash income” (which is a broad measure of income) between $200,000 and $500,000 will be affected by the AMT (table 1). That number rises to 62.9 percent for those with incomes between $500,000 and $1 million. In contrast, only 19.9 percent of households with incomes greater than $1 million will be on the AMT. "

So, it *most typically* hits taxpayers with incomes between $500,000 and $1 million, and relatively less typically hits taxpayers between $200,000 and $500,000. N'est-ce pas?

Now, how they can project that for 2017, I have no idea.

 

[Dr. J]

What about people who make a living from investment and dividend income? Should they be subject to self-employment tax? While it's treated differently for tax purposes, rental income is at its essence a form of dividend income, or so it seems to me.

Except to take maximum advantage of the benefits, you have to be a "real estate professional" actively involved in the business. Not like investment income, in these specific cases.

 

[SageBrush]

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.

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.

 

[kort677]

Now, how they can project that for 2017, I have no idea.

the projection is a simple one to make, the '17 tax codes haven't changed much from prior years.

 

[idleuser]

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.

 

[SageBrush]

This is misleading, the "most typically hits" part. From the Tax Policy Center:

"In 2017, 29.4 percent of households with “expanded cash income” (which is a broad measure of income) between $200,000 and $500,000 will be affected by the AMT (table 1). That number rises to 62.9 percent for those with incomes between $500,000 and $1 million. In contrast, only 19.9 percent of households with incomes greater than $1 million will be on the AMT. "

So, it *most typically* hits taxpayers with incomes between $500,000 and $1 million, and relatively less typically hits taxpayers between $200,000 and $500,000. N'est-ce pas?

Now, how they can project that for 2017, I have no idea.

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.

 

[N5329K]

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.

Yes, but. We should tax the things we don't want more of (CO2, for one) and offer incentives for people to choose the things we do want more of. Handing the buyer of a top end Model X a tax rebate seems bizarre until you remember that Model X is subsidizing the design, production and distribution of the Model 3 (or we hope it is). And the Model 3 was intended to open the floodgates to electrifying transportation. And it may. We want more of that.
So it's not only about high rollers getting money from the feds to do what's right. It's also rewarding them for pushing this heavy stone uphill, against all the odds, against all the entrenched interests, to reach the top.
Robin

 

[Dr. J]

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.

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}

 

[run-the-joules]

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.

I'm not in either of those groups but I'm getting screwed by AMT this year because I exercised stock options at work. My fear is that during the AMT repeal process they will also remove the carryforward credit framework that allows me to claw back that money over the next few years.

 

[Dr. J]

I'm not in either of those groups but I'm getting screwed by AMT this year because I exercised stock options at work. My fear is that during the AMT repeal process they will also remove the carryforward credit framework that allows me to claw back that money over the next few years.

Yep. I would bet yes, they will. (But I hope I'm wrong.)

 

[run-the-joules]

Yep. I would bet yes, they will. (But I hope I'm wrong.)

Yeah I'm prepared for it and I'll be furious but I'll live. Just means that I will have to spend the extra time and energy to deduct every single thing I can for the rest of my life instead of being lazy about it. There are no certainties in life, but I will make it my goal to make sure that if they screw me out of the AMT money I am going to go the extra mile to make sure they never get a single penny I don't absolutely HAVE to pay.