Nov 01, 2018
Lawmakers Look to Expand Electric Vehicle Subsidy, But Americans Want it Gone
Post by Freedom Partners
Purchasing an electric vehicle (EV) in the United States comes with a tax credit. Buyers can file for the non-refundable credit with their tax return and get up to $7,500 of their tax liability scraped, depending on vehicle specifications.
This is blatant corporate welfare. But instead of ending the scheme, some lawmakers are looking to expand it.
Manufacturers are allowed to collect tax credits for the first 200,000 qualifying vehicles they sell. After that, the credit begins phasing out until it can no longer be used. One Senate bill and a companion House bill are looking to lift that cap and extend the tax credit until 2022.
That 2022 expiration date is unlikely to stick, however. If the bills pass, the EV tax credit is expected to be included in the annual “tax extenders” bill, which was created for the purpose of renewing special-interest handouts.
A bill even more steeped in corporate welfare is the Electric Credit Access Ready at Sale Act, introduced in September. It would eliminate the 200,000-vehicle cap, extend the credit through 2028 and make the credit available at the point of sale instead of having buyers wait until they file tax returns.
But if lawmakers listen to their constituents, they’ll hear that a majority of Americans said the federal government should not subsidize EVs. After all, the tax credits help only well-connected manufacturers and people with high enough incomes to purchase electric vehicles. A luxury EV can cost up to about two times what the median American household earns in a year.
Plus, the federal government has a record of failure when it comes to picking winners and losers in the energy sector. According to a Government Accountability Office (GAO) report, federal green loan programs cost taxpayers $2.21 billion from 2008 to 2014. As of 2015, the GAO concluded that taxpayers were securing $28 billion in loans for 30 different green energy projects.
Lawmakers should eliminate this tax credit and get out of the business of corporate welfare.