Tax Bill and EV Tax Credit Discussion

[Reciprocity]

This is correct, but there is more to it. It is a bigger Fu to every affluent state with a high cost of living since taxes paid are a function of taxable income * rate. That loud sucking sound you hear is more money flowing from the affluent to the poor states.

Irony, no ? Don't worry though, the truly rich are protected. The middle class will pay the bill. I wonder if Trump and his army of despicables and losers will succeed in trashing the technological powerhouses that have been the backbone of those states' affluence.

You lost me there. How does the middle class pay for it again? Best I can tell, only those making between $150-200k in high tax states take the biggest hits. A lot more people will pay no taxes at all because of the huge standard dissection and improved child tax credit. Tax filing is also extreme simple for them. Even in California where the median involved is $70k+ and home prices are very high. I Chicago we lost salt deductions and many will lose a portion of their property tax deduction because it's capped at $10000. Here a $400k house can have $12k+ in property taxes per year thanks to the corrupt local governments. Think about that for a second, that is probably more in property taxes alone then most people in this country pay in income taxes. Il also just raised it's state tax rates by 50%. Local taxes alone are more then the Fed taxes most people. No wonder every one is leaving this hell hole and turning Florida and Texas into blue states where they will undoubtedly ruin their economies with higher taxes.

 

[SageBrush]

Best I can tell, only those making between $150-200k in high tax states take the biggest hits.

Check out the cost of living in high tech areas on the coasts.

 

[Reciprocity]

Check out the cost of living in high tech areas on the coasts.

Uh yeah, that's what I said. It's a big Fu to those folks, not the middle class at large and not the middle class in blue states where the cost of living and state taxes are low.

 

[T34ME]

No wonder every one is leaving this hell hole (Chicago) and turning Florida and Texas into blue states where they will undoubtedly ruin their economies with higher taxes.

Really? California is the second highest taxed State in the nation (depending on how you figure it), very dark blue, and has the 5th or 6th largest economy in the world (depending on how you figure it). How does that jibe with your hypothesis?

not the middle class in blue states where the cost of living and state taxes are low.

And what States would those be, that are taxed below the national average? The real hell holes are the low tax red States that suck off the teet of Government handouts.

 

[bhzmark]

More Than 50 Companies Urge Congress to Maintain Federal EV Tax Credit

For Release on December 12, 2017 Contact: John Boesel – (626) 744-5607 or [email protected]
More than 50 Companies Sign Letter Urging Congress to Maintain Federal Electric Vehicle Tax Credit

Signatories Include Executives from Ford, Audi of America, General Motors and Volkswagen of America


Pasadena, CA – More than 50 companies signed a letter today urging members of the congressional conference committee on the tax bill to maintain the federal electrical vehicle (EV) tax credit. The signatories believe that the federal tax credit continues to be vital for U.S. competitiveness and the growth of the domestic electric vehicle and component industry.

Current law provides a $7,500 tax credit that can be applied toward the purchase or lease of an EV. Unlike many existing subsidies for oil and gas drilling, the EV tax credit has a de facto sunset, as there is a cap on the number of credits which any manufacturer may claim. The House version of the pending tax bill called for the elimination of the federal EV tax credit, while the more recent Senate bill did not.

The letter states: “The Section 30D credit is a vital tool for our (CALSTART) member companies as it spurs U.S. job creation and U.S. leadership in the electric vehicle sector. Research from the Department of Energy suggests that over 215,000 jobs in the U.S. are devoted to electric drive vehicle and component manufacturing. These 215,000 workers have produced nearly 700,000 plug-in vehicles since 2010. We believe that eliminating this credit will result in an environment in which these jobs are put at risk and U.S. leadership in this area will be placed in jeopardy.”

CALSTART gave the letter to members of the Joint House Senate conference committee on the tax bill earlier today. Signatories include large, established car companies such as Audi, Ford, General Motors, and Volkswagen; start-up manufacturers including Faraday Future and Karma Automotive; and major components suppliers like Eaton and Siemens.

“There is a global race to be the leader in electric vehicle technology. Eliminating this tax credit now would significantly slow down the industry and threaten future job growth potential in the United States. Other countries are increasing their investments and strengthening their policies to grow zero emission cars. The U.S. should do the same,” said CALSTART President and CEO, John Boesel.

The letter may be found http://www.calstart.org/Libraries/P...mittee_on_Section_30D_EV_Tax_Credit.sflb.ashx


CALSTART is a national non-profit organization headquartered in California. The organization serves as a catalyst to accelerate the growth of the clean transportation technology industry as a strategy to create high quality jobs, improve public health, and prevent climate change. CALSTART has more than 175 member companies and offices in three states. For further information about CALSTART visit www.calstart.org.
--30--

 

[Dr. J]

Hey, Ford finally piped up! About time.

 

[bruinjacket]

Telling that Tesla isn't there. Also interesting: neither is Renault (Nissan)

 

[Dr. J]

You lost me there. How does the middle class pay for it again? Best I can tell, only those making between $150-200k in high tax states take the biggest hits. A lot more people will pay no taxes at all because of the huge standard dissection and improved child tax credit.

We all should remember that these analyses are looking at averages of millions of people, and there is a lot of variety within each group.

For instance: the standard deduction for married couples filing jointly increases from $12.700 to $24,000 (which is *not* double, as Congressfolk like to throw around). But since the personal exemption of $4,100 per person goes away, it's really a comparison of $20,900 not taxed now versus $24,000 not taxed next year (under the new tax law). Helpful (at low tax rates), but not very.

And what about those people who itemize (in my case, in alternating tax years so I can double up on property taxes)--two years' of property taxes paid in January and December ($13,000 total), no mortgage interest (because no mortgage), sales taxes (~$2,000--this apparently is going away and nobody talks about), and charitable contributions ($10,000). That's $25,000 of itemized deductions, plus $8,200 of personal exemptions = $33,200 not taxed. Alternating years, I take the standard deduction, which amounts to $20,900 not taxed (including two personal exemptions).

Under the new regime, my qualifying deductions (in the years I *could* itemize) total $23,000, so I take the standard $24,000 deduction. That's only $24,000 untaxed, so I'm exposed to tax on an additional $9,200 of income in alternating years, and get a break on $3,100 of income the other years. Moving the brackets around probably helps (although we don't know yet, prior to the conference committee report coming out), so in all, a slight tax increase for me (probably).

Note that the deduction for charitable contributions was gone (from both bills, I believe) and has only been added back (reportedly) in the conference committee. They saved themselves from a major blunder, but all those lucky people who no longer itemize also lose their incentive to give charitably. Like me. That aspect of the tax bill is not going to benefit society as a whole.

 

[Reciprocity]

Telling that Tesla isn't there. Also interesting: neither is Renault (Nissan)

The Fed Tax credit is a demand driver and cash does not go directly to Tesla. if Tesla has to much of something, its demand. Certainly people would order a fancier car if they are getting 7500 back, so some hits the bottom line of Tesla, its more about demand. If the industry as a whole is hurt on a 1-100 scale the average would be like 88 and Tesla would be hurt more on a scale of 15.Nissan is probably in the same boat.

Specifically the Model 3 is already competitive without incentives and demand is already off the charts with no way for Tesla to full fill all the demand for more then a year. For S/X, dont forget that Tesla has already dropped the price 5k and thrown in more options as part of the base price. They still have some room to drop prices by switching to 2170 pack, and only if they NEED to drop the price to spur demand. Tesla also has a nice wild card in free supercharging which we have seen them use.

Tesla does not need the incentives. Sure, they are nice. But Tesla does not NEED them. Also, if the fed tax credits went away, it would make competitors lose more money per car while ramping up production. Some might need to even scrap compliance cars, which would make Zev credits much more valuable again. This would offset any loss Tesla has to their bottom line for cutting prices or people not opting for more options.

 

[Reciprocity]

We all should remember that these analyses are looking at averages of millions of people, and there is a lot of variety within each group.

For instance: the standard deduction for married couples filing jointly increases from $12.700 to $24,000 (which is *not* double, as Congressfolk like to throw around). But since the personal exemption of $4,100 per person goes away, it's really a comparison of $20,900 not taxed now versus $24,000 not taxed next year (under the new tax law). Helpful (at low tax rates), but not very.

And what about those people who itemize (in my case, in alternating tax years so I can double up on property taxes)--two years' of property taxes paid in January and December ($13,000 total), no mortgage interest (because no mortgage), sales taxes (~$2,000--this apparently is going away and nobody talks about), and charitable contributions ($10,000). That's $25,000 of itemized deductions, plus $8,200 of personal exemptions = $33,200 not taxed. Alternating years, I take the standard deduction, which amounts to $20,900 not taxed (including two personal exemptions).

Under the new regime, my qualifying deductions (in the years I *could* itemize) total $23,000, so I take the standard $24,000 deduction. That's only $24,000 untaxed, so I'm exposed to tax on an additional $9,200 of income in alternating years, and get a break on $3,100 of income the other years. Moving the brackets around probably helps (although we don't know yet, prior to the conference committee report coming out), so in all, a slight tax increase for me (probably).

Note that the deduction for charitable contributions was gone (from both bills, I believe) and has only been added back (reportedly) in the conference committee. They saved themselves from a major blunder, but all those lucky people who no longer itemize also lose their incentive to give charitably. Like me. That aspect of the tax bill is not going to benefit society as a whole.

Charitable deduction is not going away. Im not an accountant. But your math is wonky and you can still deduct up to 10k in property taxes as well as interest on up to 750,000 worth of mortgage. I suggest not doing alternate years.

 

[bruinjacket]

The Fed Tax credit is a demand driver and cash does not go directly to Tesla. if Tesla has to much of something, its demand. Certainly people would order a fancier car if they are getting 7500 back, so some hits the bottom line of Tesla, its more about demand. If the industry as a whole is hurt on a 1-100 scale the average would be like 88 and Tesla would be hurt more on a scale of 15.Nissan is probably in the same boat.

Specifically the Model 3 is already competitive without incentives and demand is already off the charts with no way for Tesla to full fill all the demand for more then a year. For S/X, dont forget that Tesla has already dropped the price 5k and thrown in more options as part of the base price. They still have some room to drop prices by switching to 2170 pack, and only if they NEED to drop the price to spur demand. Tesla also has a nice wild card in free supercharging which we have seen them use.

Tesla does not need the incentives. Sure, they are nice. But Tesla does not NEED them. Also, if the fed tax credits went away, it would make competitors lose more money per car while ramping up production. Some might need to even scrap compliance cars, which would make Zev credits much more valuable again. This would offset any loss Tesla has to their bottom line for cutting prices or people not opting for more options.

By "telling" I was thinking more along the lines that Tesla was already planning for the phase out and having an active incentive program for the competition would be bad for Tesla, not so much that Tesla is concerned about increasing the gap between short term supply and demand.

 

[Dr. J]

Charitable deduction is not going away. Im not an accountant. But your math is wonky and you can still deduct up to 10k in property taxes as well as interest on up to 750,000 worth of mortgage. I suggest not doing alternate years.

If you think my math is wonky, point out where, exactly.

If I don't itemize in alternate years, I don't have enough deductions in a single year to itemize ever (thus the strategy of alternating). The limitation of $10,000 in property taxes even makes the situation worse for me (puts me further from being able to itemize). And since I don't have a mortgage (which I stated earlier), I can't deduct any mortgage interest.

Edit:
But you're right about the charitable deduction--it was (and is) maintained, just diminished in impact due to the higher standard deduction.

 

[avoigt]

Ontario to introduce rebates to boost electric truck demand

 

[SageBrush]

so in all, a slight tax increase for me (probably).

Very nice analysis, but perhaps an error in your arithmetic:

Over two years with the "reform" you will gain 48k in deductions
Over the past two years you had 20.7 + 20.7 +2+10+13 = $66.4k in deductions

So you will have about 9k in extra taxable income each year on average. So somewhere in the $2,500 range extra annual taxes.

 

[Reciprocity]

If you think my math is wonky, point out where, exactly.

If I don't itemize in alternate years, I don't have enough deductions in a single year to itemize ever (thus the strategy of alternating). The limitation of $10,000 in property taxes even makes the situation worse for me (puts me further from being able to itemize). And since I don't have a mortgage (which I stated earlier), I can't deduct any mortgage interest.

Edit:
But you're right about the charitable deduction--it was (and is) maintained, just diminished in impact due to the higher standard deduction.

Dont forget the child tax credit.. or do you not have children? Kids are awesome, you should have a couple.

 

[comanchepilot]

We as a country should be the leader in the green sector, just look at what China is doing. If we do not get our butts in gear we could be the most polluting country in the world.

we have a long way to go for that . . .

Looked at as % energy consumed vs. GDP we are far and away one of the best out there. . .

 

[SageBrush]

we have a long way to go for that . . .

Looked at as % energy consumed vs. GDP we are far and away one of the best out there. . .

China manufacturers, the US marks up the price.

Of course your ratio looks good, but it hides reality. And common sense should help you here: Look at household consumption patterns. Americans are pigs, and this is true in any sector you actually analyze to any depth.

 

[Dr. J]

Dont forget the child tax credit.. or do you not have children? Kids are awesome, you should have a couple.

Negatory, Captain.

 

[Dr. J]

Very nice analysis, but perhaps an error in your arithmetic:

Over two years with the "reform" you will gain 48k in deductions
Over the past two years you had 20.7 + 20.7 +2+10+13 = $66.4k in deductions

So you will have about 9k in extra taxable income each year on average. So somewhere in the $2,500 range extra annual taxes.

I probably explained myself poorly.

Every tax year stands alone, so it's necessary to compare one pre-tax reform year to one post-tax reform year. In my case, it's actually two (separate) pre-reform years to two post-reform years, to be comparable and perfectly fair.

Fundamentals: the tax code allows a range of income to be taxed at a zero percent rate. After that, it's either 10% (currently and in the Senate bill) or 12% (in the House bill). The zero percent tax bracket starts at zero and ends at your total of deductions (whether standard or itemized) + exemptions. Post-reform, exemptions are eliminated, so it's simply your total of deductions.

Pre-tax reform
Case 1. In years I itemize:
I can scrounge itemized deductions of $25,000, and benefit from two personal exemptions of $4,100 each, for a total of $33,200 in income that is not taxed.
Case 2. In years I do not itemize:
I have a $12,700 standard deduction (MFJ) plus two personal exemptions of $4,100 each, for a total of $20,900 in income that is not taxed.

Post-tax reform
(standard deduction is insurmountable--i.e., I never itemize--and personal exemptions are no longer allowed):
$24,000 in income that is not taxed.

So, in case 1, I "lose" under reform because ($33,200 - $24,000) $9,200 additional income is taxed.
In case 2, I "win" under reform because ($20,900 - $24,000) $3,100 *less* income is taxed.
On average, I "lose" under reform because ($9,200 - $3,100)/2 years ==> an additional $3,050 per year of income is taxed. So that costs me about $305 per year in additional tax, on average.

I'm doing the math in my head, but it seems simple. I'm also recalling all tax figures from memory. Any errors?

One thing that probably confuses the pro-tax reform enthusiast is that nobody talks about personal exemptions going away. That greatly diminishes (though does not entirely negate) the value of the huge new standard deduction (and, no, it still isn't a "doubling" of the std. deduction). It's also the reason that the child tax credit *had* to be retained and then expanded to a higher income level so middle class families with children didn't get creamed.

So they "intended" this to be a tax cut for the middle-class, but boy howdy are they having a hard time making it so, as demonstrated by the multiple fixes.

 

[Reciprocity]

I probably explained myself poorly.

Every tax year stands alone, so it's necessary to compare one pre-tax reform year to one post-tax reform year. In my case, it's actually two (separate) pre-reform years to two post-reform years, to be comparable and perfectly fair.

Fundamentals: the tax code allows a range of income to be taxed at a zero percent rate. After that, it's either 10% (currently and in the Senate bill) or 12% (in the House bill). The zero percent tax bracket starts at zero and ends at your total of deductions (whether standard or itemized) + exemptions. Post-reform, exemptions are eliminated, so it's simply your total of deductions.

Pre-tax reform
Case 1. In years I itemize:
I can scrounge itemized deductions of $25,000, and benefit from two personal exemptions of $4,100 each, for a total of $33,200 in income that is not taxed.
Case 2. In years I do not itemize:
I have a $12,700 standard deduction (MFJ) plus two personal exemptions of $4,100 each, for a total of $20,900 in income that is not taxed.

Post-tax reform
(standard deduction is insurmountable--i.e., I never itemize--and personal exemptions are no longer allowed):
$24,000 in income that is not taxed.

So, in case 1, I "lose" under reform because ($33,200 - $24,000) $9,200 additional income is taxed.
In case 2, I "win" under reform because ($20,900 - $24,000) $3,100 *less* income is taxed.
On average, I "lose" under reform because ($9,200 - $3,100)/2 years ==> an additional $3,050 per year of income is taxed. So that costs me about $305 per year in additional tax, on average.

I'm doing the math in my head, but it seems simple. I'm also recalling all tax figures from memory. Any errors?

One thing that probably confuses the pro-tax reform enthusiast is that nobody talks about personal exemptions going away. That greatly diminishes (though does not entirely negate) the value of the huge new standard deduction (and, no, it still isn't a "doubling" of the std. deduction). It's also the reason that the child tax credit *had* to be retained and then expanded to a higher income level so middle class families with children didn't get creamed.

So they "intended" this to be a tax cut for the middle-class, but boy howdy are they having a hard time making it so, as demonstrated by the multiple fixes.

BTW, all your income is taxed at a lower rate as well. Just so you know. Not only lower brackets but the taxes are progressive, meaning that the first $X has 0% tax, the next $Y amount is taxed at a lower rate then today. Again, not an accountant, but you live in Texas, your getting a tax cut. Period. It might not be tens of thousands of dollars but you will pay less tax and your paycheck will be bigger. Enjoy.