House Republicans propose to scrap $7,500 electric vehicle credit | Hacker News Reader

House Republicans propose to scrap $7,500 electric vehicle credit

reuters.com

82 pointsrippsu155 comments

I have a lot to say on this...

> Critics say electric vehicle buyers tend to be wealthier than average Americans and do nod need subsidies.

I love how this gets buried at the bottom after an avalanche of criticism. A free $7500 for the rich and an additional $7500 in revenue for manufacturers. Say what you want about the American political system, it is a master class in manipulation.

"But the environment!"

Assuming someone who buys a $100,000 car is unwilling to spending $107,500 for the same vehicle. Yes the environment would suffer, that is also assuming electric cars (in their current state) are less impactful than fossil fuel vehicles (which isn't the case). In fact, used internal combustion cars should be given a subsidy if you care about the environment.

"But the poor can't afford these cars without it!"

The poor can't afford it with it. How many bolts do you see driving around? I've lived in Asheville NC, Nashville TN, and Portland OR. I've seen 3 bolts total and hundreds of $100k Teslas driving around.

If you're poor, you probably live in an apartment without an electric car charging station. You probably can't afford a new car so you buy used which is exclusively internal combustion. So how does this tax credit affect you at all?

---

I'm intensely fascinated by conversations and how they are framed to manipulate opinion. Depending on your political slant, you could have easily framed this as "tax breaks for the wealthy" or "an attack on green energy" or "supporting domestic manufacturers" or "hurting domestic manufacturers".

It's all bullshit and I can't stand it anymore...

I'm with you. That seems to be the the reality of politics, it's persuasion wars where it's really hard to get ahold of the facts, and even with the facts it's hard to tell what the better option is.

Of course things get framed to manipulate opinion.

Now, I actually don't mean this with any snark, but how is what you're doing any different? This tax credit applies to plenty of vehicles sold for much less than $100,000.

The majority of the EV market is high-end, luxury vehicles.

There is a 200k cap on the credit. Meaning mass market EVs do not receive the credit. It exclusively benefits low volume, high margin EVs. Which are exclusively marketed to the rich.

It is?

As of the end of 2016 Tesla's cumulative sales were ~160k units. Nissan alone has produced over 300k of the Leaf.

The Bolt exceeded the Model S in sales last month selling just under 3000 units.

Please re-read what I said:

> There is a 200k cap on the credit.

Meaning if you sell more than 200,000 cars you no longer get the credit. GM sold 10 million ICE cars in 2016. If they were all EV 9,800,000 would not have received the credit.

> The majority of the EV market is high-end, luxury vehicles.

That's false.

> It exclusively benefits low volume, high margin EVs.

That's also false. It benefits high margin vehicles regardless of volume and high margin does not necessarily mean luxury.

> Meaning if you sell more than 200,000 cars you no longer get the credit.

That's also false. Crossing the 200k mark starts a phase out process that takes a year.

So if GM managed to produce and sell 10 million ICE cars in the United States in 1 calendar year, the buyers would all receive a tax credit.

As yet, no manufacturer has reached 200k sales in the United States. Again Nissan leads the pack but has yet to reach the 200k mark.

I just bought an EV that was $31K list for $16K (lease) because I got $7500 off my lease price for the federal tax credit.

Do you consider $31K to be luxury? Or are you saying that because you aren't really familiar with the market?

>that is also assuming electric cars (in their current state) are less impactful than fossil fuel vehicles (which isn't the case)

Is that true? Got a reference?

The problem is that external costs like pollution are not being priced into the cost of ICE vehicles by, say, a pollution tax. This limited subsidy is a backhanded way of doing that.

I don't see the issue with rich people benefiting from it, because it's exactly those rich people buying 100K Teslas that are paying for the cost of driving research into better battery technology and cheaper cars so everyone benefits from cleaner air and reduced global warming.

A strong argument is that using an already existing car (buying used) is way better for the environment that creating a new car, regardless of the MPG.

Obviously if you play with the numbers (CO2 per mile driven, # of miles in life of car, CO2 per new car, expectation for expected reductions in total CO2 reduction by waiting if you want to get fancy) you can get it to tilt in either direction.

Yes its true. I do not have a source handy so I'll have to rely on some other HN commenter to help me out.

Basically the math works like this:

An internal combustion cars cost X tons of carbon to produce. An an EV costs Y tons of carbon to produce. If you need a new car, it will probably require the same amount of carbon to produce an EV as a combustion car. But if you can drive a used car and extend its life 5, 10, 15 years, you save all the carbon of producing the car (which is where the majority of the carbon cost comes from).

> I don't see the issue with rich people benefiting from it, because it's exactly those rich people buying 100K Teslas that are paying for the cost of driving research into better battery technology and cheaper cars so everyone benefits from cleaner air and reduced global warming.

I love investing in technology. However, there's probably more efficient ways of doing it. Every dollar spent to help the rich could have been spent helping the poor, or the environment, or funding research.

To be fair if you keep the EV long enough then it will work out to be better for the environment.

Though I can't find a reliable number for how many years that actually is and I'm not sure if the average person who owns an EV would even keep it that long...

Maybe not better in the long run. You need to overhaul the batteries (replacing dead cells can be done individually) every decade with current technology. You also need to overhaul a combustion engine (cylinder bore/hone, worn parts replaced, warped parts milled flat) every decade-ish, so their sustaining carbon costs are about the same. It's at least a lot closer than most people realize.

A PZEV (very low emission ICE vehicle) is the sweet spot right now in terms of overall environmental impact. It will be a few years before EVs are the clear winner.

But used cars eventually do have to be replaced, and in the long run it is better to replace them with electric vehicles. It may not be an immediate net benefit but new cars are being built either way and increasing the percentage of new cars that are electric is better in the long run unless Y in your equation is greater than X + the total amount of carbon produced by a internal combustion car across its lifetime.

So basically, your argument only works if you assume that the people buying EVs would have either kept on driving their old cars OR sold their old cars and replaced them with a used car?

So now EVs are some kind of evil temptress?

I think I can do without reading that source now.

> I think I can do without reading that source now.

This is crazy, man. I'm just saying it costs less carbon to keep a used car. I'm not accusing EVs of "being an evil temptress".

Plus there's the environmental impact of strip-mining lithium for the batteries. This impacts hybrids as well as EVs.

Owning a Tesla (the current fad) or Prius (the previous fad) has long been about looking like you are environmentally conscious rather than actually being environmentally conscious. True lovers of mother nature ride the bus, train, or ride a bike.

Owning a Prius was about feeling good.

Owning a Tesla, from what I can tell, is about operating a truly excellent vehicle that happens to be electric.

The Mercedes-Benz S-class is a better car than the Model S in many ways (not all). A lot of people could afford either but buy the Model S because it is electric, not just that it happens to be electric.

Just a quick thought from someone that actually went shopping and drove both: The MB S-class beats the Model S in terms of luxury feel. Hands down. The Model S is faster. And quieter. But it does not feel as good as a MB at all. Before you ask, no, I ended up buying neither. I bought a Subaru Forester and an airplane for the same money.

The carbon footprint of mining and refining oil for gasoline certainly dwarfs that of lithium mining. Partially because there are a lot more ICE cars than EVs now, but also because gasoline is needed repeatedly over the lifetime of the car, while lithium is mined only once per car.

One question is: what happens to the IC vehicles that don't get re-sold in their home country? Do they get shipped to other countries, or just junked? I live in the US and saw many older cars when I went to South America. Many were 25 or 35 years old.

So the question is what is the dynamic interplay between different markets for used IC vehicles? Should we be shipping 1995 Camrys to less-developed countries so they can junk their 1985 Camrys?

And then of course note that the 1995 Camrys probably get worse gas mileage than the 1985 Camrys because they have are heavier due to safety features....

2017 Camry: 40 MPG> for hybrid or 27mpg (2.5l) 2005 Camry: 25 MPG (2.4l) 1995 Camry: 23 MPG (2.2l)

Meanwhile the definition of "Camry" has changed - they are a lot larger, more powerful and more refined now. Note, for example the engine sizes going up as the MPG gets better.

http://www.fueleconomy.gov/feg/findacar.shtml

> 5, 10, 15 years, you save all the carbon of producing the car (which is where the majority of the carbon cost comes from).

False [0].

[0] https://group.renault.com/wp-content/uploads/2014/09/fluence...

Page 91, Figure 49: "Comparing carbon footprint of EV and ICE vehicles".

Up to 85% of the carbon footprint of a car comes from driving it. Heck, even a typical hybrid during its lifetime saves roughly 150% worth of its weight in CO2 emissions. Taxis easily double that figure.

Yep. Completely false. The in-use phase of ICE cars belches so much carbon that the car's construction phase carbon can safely be ignored in a first approximation of impact. The reason construction phase carbon is important in an EV is that it can be the only carbon that matters. When an EV is recharged exclusively from renewable sources, as many are, the use phase carbon is effectively zero. Which makes the construction phase important to measure, but the total lifecycle carbon impact of an EV can still be orders of magnitude less than that of an ICEV.

> The problem is that external costs like pollution are not being priced into the cost of ICE vehicles by, say, a pollution tax. This limited subsidy is a backhanded way of doing that.

Using the carbon offset market, you could offset 760 Tonnes of CO2 with $7500. That's the carbon equivalent of driving an ICE for over 2 Million miles.

Also it is a tax credit.. meaning you only get the $7,500 if you actually owe at least $7,5000.. AFTER the standard deduction. Basically, anyone with under ~$100k annual income would not even receive the whole credit, if any at all.

"Tax credits are subtracted not from taxable income, but directly from a person’s tax liability; they therefore reduce taxes dollar for dollar. As a result, credits have the same value for everyone who can claim their full value."

http://www.taxpolicycenter.org/briefing-book/whats-differenc...

Right, they are talking about the situation where someone only owes $6,000 in taxes. They get a $6,000 tax credit.

So setting aside whether this is fair or unfair, people that owe more taxes clearly get a bigger benefit from the credit.

The poor don't have taxable income. You can only claim the credit if you itemize which is restricted to even higher tax brackets.

No need to itemize, it is reported on line 54 and offsets line 44:

https://www.irs.gov/pub/irs-pdf/f1040.pdf

But lots of people don't end up paying $7500 in income taxes.

It's actually close to $50k before you owe that much after standard deduction... $100k would be closer to $18k taxes.

Also, you don't need to take it all one year. Tax credits carry forward up to 10 years.[1]

[1] Disclaimer, I am not an accountant

You get 100% of this credit passed on to you (cut right out of your negotiated amount) if you lease for 36mo. That's they way to get inexpensive electrics - lease and then keep it if you want it after 3 years.

Yep. I am pretty left leaning on environmental and economic issues. But the tax credit from the start was a redistribution of wealth upwards. A side effect being that more hybrid cars were bought.

Yea, I'd be far happier scrapping this and putting an even bigger credit given some requirements. As a fake example: %10 discount on electric cars @45k. %15 discount for electric cars at 25-45k. 25% discount for cars below 25k.

Way too much I'm sure, but that's besides the point. The lowest tier there is one of the most important imo. Because you're absolutely right, buying used combustion cars is what credits like this should be targeting, imo. Conceptually at least, I clearly know nothing of what I talk about.

>that is also assuming electric cars (in their current state) are less impactful than fossil fuel vehicles (which isn't the case)

Unless your electricity is generated by burning peat, in terms of CO2 emissions, this is false.

Of course, the correct solution to the emissions problem is to reduce the number of miles Americans drive. But you'll never hear a House Republican say that.

Ironically this might have been true in the past when your only EV option was a Tesla; however the Chevy Bolt is selling like mad, the Chevy Volt continues to sell well and you have quite a few choices either out or coming to market in early 2018, including the VW E-Golf, Hyundai Ioniq, Kia Soul EV to name just a few that are under 30k.

Removing the EV Credit now makes no sense; perhaps a better approach is to limit the EV Credit to cars that cost under 50k; this would ensure the credit isn't used on luxury EV's and allow the market to continue to grow.

> Ironically this might have been true in the past when your only EV option was a Tesla; however the Chevy Bolt is selling like mad, the Chevy Volt continues to sell well and you have quite a few choices either out or coming to market in early 2018, including the VW E-Golf, Hyundai Ioniq, Kia Soul EV to name just a few that are under 30k.

IIRC to get the full $7,500 it needs to be a full electric with a battery large enough for X miles so the Bolt wouldn't qualify (for all of it).

> Removing the EV Credit now makes no sense; perhaps a better approach is to limit the EV Credit to cars that cost under 50k; this would ensure the credit isn't used on luxury EV's and allow the market to continue to grow.

You also need a tax bill of at least $7,500 to take advantage of the full credit. If your tax bill is only $5,000 then that would be max you could get back.

If your tax bill is only 5,000 then you probably shouldn't buy a new car.

Your first statement is not true. The tax credit is based on the size of the battery. The Volt qualifies for the full $7500 (which is one big reason I chose it over other hybrid options) as does the Bolt.

https://www.edmunds.com/fuel-economy/the-ins-and-outs-of-ele...

Right. Obviously, if you put a tax credit in place to incentivize manufacturers, you have to wait for their ramp-up time.

Based on EPA estimates of global greenhouse gas emissions, converting every US passenger vehicle to electric, assuming those vehicles are then driven for at least seven years, the net reduction to global emissions is roughly 1%.

How'd you come up with that number? The US accounts for 15% of emissions and personal transportation accounts for 1/5th of US emissions.

That accounts for 3% annually.

Perhaps that accounts for our electricity generation being coal-based?

As of 2016 35% of our production came from Natural Gas vs 30% from Coal. So if anything we're natural gas based now.

That being said, I think you're on the right path as only 35% came from renewables (15%) or nuclear (20%).

So the 1% is accurate if the power generation remains static but renewables and nuclear are growth sectors. A bunch of reactors are allegedly coming online in the next decade. Wind and Solar are also growing quickly.

This also doesn't take into account that most of the energy used to power/charge these EV cars is coal based, which is orders of magnitude more dirty than burning gasoline.

Come on. $100k vs $107k cars are a disingenuous comparison. They turn $30k cars (entry level luxury) into $23k cars (middle class, right in there with the Civic, Camry, Corolla, Accord, etc). If this is your objection, let’s phase it out for cars over a price threshold.

Continuing the theme of governments raising taxes that disproportionately affect the poor in the name of the environment: California's new gas tax is stupid.

In what is already one of the most expensive states to live in the per gallon gas tax increased by 40% on Wednesday. That means that the total state and federal taxes come out to about 77 cents [1] per gallon. While 77 cents doesn't seem like much, consider that the average cost per gallon of gas in California is around $3.10 [2], which puts the effective tax rate at around 25%.

A 25% tax rate is absolutely insane in a country where you need a car to get around. Take into account the 53 cents per mile the IRS uses as its estimator of the cost of driving a vehicle [3], the average one-way commute distance is about 8 miles [4], and the average fuel economy for California drivers is around 24 miles per gallon [5], this works out to about $10 per day in just regular vehicle expenses, or around $300 per month.

For the poor in California this is just another example of how expensive it can be to be poor.

[1]: http://www.sandiegouniontribune.com/business/energy-green/sd...

[2]: http://www.californiagasprices.com/Prices_Nationally.aspx

[3]: https://www.irs.gov/newsroom/2017-standard-mileage-rates-for...

[4]: https://www.marketwatch.com/story/here-are-the-typical-commu...

[5]: http://www.latimes.com/business/autos/la-fi-hy-cars-fuel-eco...

Is my math right that the $0.77 per gallon in taxes comes out to about $10.50?

Seems the bigger driver of the $300 is the need to rely on a car.

> It's all bullshit and I can't stand it anymore...

For those of us in Southern California, even if electric cars aren't "carbon neutral", they are still a win for two reasons.

1) Electric cars that are stopped don't burn energy. Now, with the new engines that can turn themselves off and on quickly, that's becoming less of an issue, but there is still some amount of idling in any combustion engine.

2) The pollution involved with electric cars is concentrated, industrial point-source. This is FAR easier to mitigate than the diffuse, individual pollution sources represented by combustion cars.

Plus the fact that as the source of electricity to the grid changes, so too does the cleanliness of all the vehicles.

Sure, things today may be a wash in terms of overall emissions in many areas, but as time goes on and dirty power plants are shut down and cleaner sources brought online, the emissions due to EVs increases.

I'm seriously evaluating buying an electric car like the Bolt (though the cheap interior is a bit of a turn-off for a longer commute) or the Ioniq EV (much nicer, though with less range) since many employers are offering EV charging at work. That'd make my out-of-pocket operating costs basically negligible (other than occasional air filter and tire rotations), which is nice.

I'd love to see the tax credit turned into a point-of-sale reduction in price so more people can benefit, rather than just those with a >$7500 tax bill.

I am going to receive 7500 dollars of your money, my money, and everyone's money, come January for a purchase I need no assistance in making.

how is that fair. I am taking it because it is there and financially it makes no sense not too.

this is pure gift to those well off. it has nothing to do about protecting the environment. it was a gift to GM initially and because a gift to not only the well off but any manufacture who wanted to take it.

it needs to die.

If we just eliminated subsidies in the oil & gas world, I can promise you the economy will move towards renewable extremely fast.

Make it a phase out of two - four years..., it would boost sales of EV's and our entire transportation network much more quick than EV tax credits would, AND, it would be a fair market for once!

It would spur innovation, create many jobs, we would lead the world once again in regards towards moving to a 100% renewable economy, etc... so many things. The fat, old pigs/politicians of the O&G industry need to be shown the door... It's 2017... we can do this now.

Not to mention the extra long term taxpayer savings on currently increasing medical costs...

Not being reliant on it would have a massive effect on the Middle East. Whatever stability they have now would go. That aspect would need a lot of care, and the West’s track record is not good.

Sure, but that is something they need to figure out. The world cannot wait on the middle east to stabilize... they don't exactly have a great track record of doing so either..

It's not clear that oil revenues actually improve stability in the Mideast. A considerable proportion of the revenue is quite literally diverted into forces intended to cause states to fail or stagnate.

>A considerable proportion of the revenue is quite literally diverted into forces intended to cause states to fail or stagnate.

Yeah you're gonna need a credible source on that claim.

It's my understanding that, at their height, IS derived much of their revenue from captured oil assets. Note that I'm specifically not making the claim that all middle eastern oil revenue is tied to some terror group, but I'm pretty sure some of it is.

Please do correct me if I am wrong.

That ISIS got funding from oil is not controversial that I’m aware of. The Independent did a lot of coverage of it at one stage. I’m sure they aren’t the only group too. Depending on your politics, the Kurds make money from oil too, but they are a state waiting to exist in my view.

That seems like a very specific and comparatively small time period that doesn't really stack up to the attempted scale of claiming that a considerable portion of revenue is used to destabilize middle east states.

It gave them plenty of funds for sure (and only for a limited time) but saying it's a significant enough portion to the point of lending credence to the claim being discussed? I have trouble buying that without a source.

China and India definitely can pay for a ton of oil.

What's the biggest specific subsidy of oil or gas right now that you know about?

> What's the biggest specific subsidy of oil or gas right now that you know about?

The lack of a carbon cap. And also the fact that large ships and buildings are allowed to burn oil sludge without particulate filters.

US gas subsidy, clean coal research subsidies, tax credits for oil transportation / refinement. Totalled together its in the 10s of billions range

Oh...the trillions we've spent on warfare in the Middle East comes to mind...

Correct ... its pure deception to continue allowing governments to shoulder this military expense ... petrol conglomerates must pay the full cost to society of fighting these endless wars to permit continued resource extraction ... once this cost is factored into petrol at the pump then ALL green energy sources suddenly become the obvious low cost choice

When taking in account of direct and indirect subsidies, see this IMF report: http://www.imf.org/en/News/Articles/2015/09/28/04/53/sonew07...

There are many other reports by many other groups...

Also consider the costs of using tax payer money to pay for/subsidies infastructure/reasearch in the fossil fuel industry.

From that report:

> The bulk of energy subsidies in most countries are due to undercharging for domestic environmental damage

I understand it's an accepted part of the word subsidy but it always feels dishonest when people treat "lost revenue" and actual money given to industries the same and then combine them into a huge number that is 95% theoretical losses that are difficult to quantify.

Right, argumentative, cloudy, and political. If that's what is meant by "dropping the subsidies", then the simple sounding solution actually hides all the complexity of the problem.

Saying, "read this giant report that contains a bunch of other irrelevant data" isn't the most helpful. The other comments so far in this thread are argumentative, non-specfic, or I still couldn't verify their existence by googling.

I take it as a given that we want to continue to have cheap energy as we transition to renewable resources. Our economy and much of our quality of life are dependent on the incredible abundance that cheap energy has provided, so I'm not in favor of throwing the baby out with the bath water! If we need to defend our cheap energy supplies sometimes, that's probably OK.

The kinds of subsidies I'm interested in hearing about are where oil or gas is getting special treatment compared to other businesses. I'm not in favor of special treatment for most businesses, but I'm especially disinclined to unlevel playing fields.

I'm in favor of the adoption of renewables and somewhat in favor of subsidies and breaks for renewables to encourage it. I'm not in favor of special privileges for oil and gas, over and above what's afforded other industries. However, instead of penalizing oil and gas with respect to other industries, I'd prefer subsidies and breaks for renewables. Cheap energy is critical to pretty much everything.

That will never happen though, since the biggest O&G subsidy is the fact that the global oil market is denominated in US Dollars which coincidentally also happens to be the source of almost all US soft power.

Unless the US faces an actual challenge globally from China and/or Russia.

One day we will wake up and the US Petrodollar will be the emperor's new clothes.

Of course, electric cars are typically charged via some kind of fossil fuel so to a certain extent they also benefit from these subsidies -- just not as much.

> Make it a phase out of two - four years..., it would boost sales of EV's and our entire transportation network

Doesn't work. Stuff simply does not scale that fast. Maybe the big automobile companies can scale up EV production, but there's still the battery bottleneck (which prompted Tesla to build the Gigafactory, but I am not aware of any other project even remotely near that scale - and Tesla sure as hell won't sell its batteries to competitors, they got enough demand with their cars + the energy storage stuff).

Public transportation will only be buses that are able to scale. Even light/street rail takes years to get politically approved and then financed, and actual proper intercountry transportation takes decades to build - if it gets built at all given how expensive it is.

And if they scrap oil subsidies too, the market can figure it all out. But looks like most direct and indirect O&G subsidies will remain.

~ rolls eyes ~ if you seriously believe the market magically deals with externalized costs

The market doesn't care about external costs, you're right.

One thing to keep in mind though is that we may be nearing the time in which the market could handle this because renewables are getting very cheap. I'm not sure if we're at the point where if you dropped all oil subsidies that renewables would be cheaper (maybe not? I haven't done the math) but we should be getting close if we're not already there. At that point the market could, in theory, move to the one with the higher profit margins while still not caring about external costs.

If we want to leave it all to the markets, we need to consider the externalities too, e.g. through a carbon tax.

Which doesn't even take into account other serious externalities like smog.

O&G companies are able to write off the cost of doing business just like other businesses. They are not "subsidies".

https://www.forbes.com/sites/drillinginfo/2016/02/22/debunki...

It’s a ballsy move to compare the oil and gas industries to health. There is plenty to criticise about the way the US healthcare system is run, but do people really begrudge treating the two industries differently?

Yes, I do begrudge the dickens out of people who insist that being able to deduct oil exploration costs is an unfair "subsidy" to oil and whose removal would instantly turbocharge renewables by itself.

Letting companies deduct expenses like everyone else is not a subsidy.

It's like it's become part of the common mythos, that US oil companies get massive cash subsidies that are the sole reason they're not beaten by renewables, but the moment you apply any scrutiny it falls apart.

(Environmental concerns are legit, but the lack of better regulation is a non-standard usage of "subsidy" and people go further to claim that tax-deductions-everyone-gets are subsidies.)

Do not think that some industries should be disincentivised and others incentivised?

I think specific activities, irrespective of industry, should have their external costs priced in.

I don't think that failure to do so the same thing as a cash subsidy.

So stick approach rather than a carrot? If that’s what you mean I think I prefer this.

That author claims that tax exemptions aren't subsidies "according to Dictionary.com".

If I run a paint factory and all my competitors have to pay to to have their toxic waste hauled away and properly disposed of, but the taxpayer foots the bill for disposing my waste, that sounds like a subsidy to me.

Does it cease to be a subsidy if I'm dumping the waste in a river and the government is hauling it away from there, rather than collecting it at the factory gate?

Seems to me anyone who's opposed to government subsidies would also be opposed to profiting from negative externalities.

I'm generally in favour of allowing the market to do its work. That said, in the case of emissions, it is too expensive to attribute and process torts, so the true cost of emissions is rarely ever passed on to even very large polluters who have damaged a lot of property. This is why the original mandate of the EPA is so legitimate.

I'm with you on the subsidies though.

I mean it's kind of the point of tax reform. You eliminate deductions that only wealthier people benefit from and lower the rate over all. You'll see a lot of deductions go away that are good on their own but in aggregate with all the other deductions give us such a massively complex system.

The states and cities that are coming forward with ridiculous EV mandates should be the ones covering the subsidies, not the entire nation.

I disagree. Phasing out new production of C02 producing vehicles benefits everyone and by extension, failing to encourage it hurts everyone. This isn't a localized issue. It isn't like Texas (for instance) can produce as much carbon dioxide as they want, and it will only affect Texas.

Yet the state you criticize (Texas) is leading the country in green, renewable energy [1]

1. https://www.wsj.com/articles/which-state-is-a-big-renewable-...

I didn't research, I just picked one at random. Please replace Texas with whatever state you like. That isn't really the point.

Edit: And also, I just checked and Texas does NOT do very well on CO2 emissions per capita.

Edit: Also I did some more checking and Texas is not leading the country in renewable energy, it is 22nd

Yeah! Pollution is a local problem! Definitely address it at the city level. Can we go further? Why not just have specific individuals who care about this funding the subsidies?

Have you visited LA recently? Pollution is very much a local problem. Why do you think it's cities leading the way on gasoline engine bans? I have no problem with these bans, but cities that take them up should be providing the incentive for switching, not offloading their problems on the rest of the country.

Yes, some pollution is to a degree localized, but not all of it. Don't forget that LA residents aren't somehow polluting more than their counterparts. In fact I suspect they are polluting less. It's just that they are concentrated in one place. And once again reducing C02 emissions (probably the most pressing pollution issue of our time) is not localized.

Sadly, most of the deductions that disproportionately benefit wealthy people aren't going anywhere (mortgage interest, IRA/401k/tax-free savings, FSA/HSA, etc.) since they appear to benefit everyone and foster the american dream of home ownership.

* Mortgage Interest is dropping from 1-million to 500k.

* State / Local tax disproportionately benefits richer states (which tend to have higher income taxes). That's also going away.

The real issue IMO is that the standard deduction is going up, and the top tax rate is going down. The overall effect seems to be a tax-increase for me and a tax-decrease to those who are richer than me.

They probably should close the backdoor Roth loophole, and a few other corporate loopholes (Irish Double Sandwich or whatever its called).

https://en.wikipedia.org/wiki/Double_Irish_arrangement

The top tax rate is NOT going down. It remains at 39% under the proposal released by the House today.

The top marginal rate is the same, but because they're moving the brackets you can make twice as much money before you pay 39%(for a married couple)

And because taxes are marginal, that effectively becomes straight CA$H MONEY to everyone in the 39% bracket.

How does the standard deduction going up benefit the rich or harm the non-rich? Aren't lower- and middle-class people most likely to take the standard deduction, and thus be able to deduct more?

They're cutting a lot of deductions.

EDIT: Seems like my information is out of date. I'll just edit my misinformation out (ie: most of the previous post)

401k deductions and plans aren't being touched.

Yeah, my info was out of date. I edited my post to something way more conservative.

Probably not the time yet to write about the proposal as if it is sure to happen/stay the same.

Fair point. These things change dramatically with debate.

> You eliminate deductions that only wealthier people benefit

The Nissan Leaf and Chevy Volt aren't particularly upper class cars. Neither is the Model 3.

Nor are people spending $30,000 on a vehicle showing particularly price sensitive behavior.

Lots of fine vehicles available for $15,000, $15,000 is an awful lot of gas (and you save on insurance and financing with a cheaper vehicle, so the lower maintenance on the electric isn't the only consideration).

Maybe it's not just about cost, but about driving a vehicle that doesn't directly contribute to diffused emissions? And use motor oil, hydraulic fluid, coolant, belts, etc?

If you're going to compare long term maintenance costs, you absolutely have to include the battery pack replacement cost. Otherwise you're being disingenuous or even deceptive.

Many '11-'12 Leaf owners are already complaining about significantly reduced ranges on their vehicles. What happens after 60,000 miles if your battery starts rapidly going under 9 bars?

Keep driving with terrible range anxiety? Plan your routes with chargers in mind? Have a stopless commute now require you to stop and charge, making trips even longer?

Replace the battery pack?

http://www.greencarreports.com/news/1111264_new-life-for-old...

Whoops, that's going to be $6,200.

> If you're going to compare long term maintenance costs, you absolutely have to include the battery pack replacement cost.

> Keep driving with terrible range anxiety?

If we're bringing all of this up; we must consider the reliability increase as well.

They aren’t an option for the majority of Americans.

Yes, those are cars for the wealthy. Most people cannot even afford a car. If they can, they’re probably not buying a new car. And, if they do buy a new car, they’re probably looking to spend close to $20,000.

My parents just spent a little over $20k on a Leaf. Not exactly a Bentley.

Congratulations, your parents are relatively wealthy.

And, did they buy a new one? MSRP is $30,680: https://www.nissanusa.com/electric-cars/leaf/versions-specs/...

New, yes, $30k no. electric utility provided a significant deal. In some states you can apparently get the 2016 model for $15k out the door now.

A 2016 model year car, at the end of 2017, is not “new”. Also, I don’t know what specific electric utility subsidy you’re referring to, but that doesn’t help your argument, in this thread about subsidies, IMO.

What was the out-the-door price for your parent’s 2017 Leaf?

> If they can, they’re probably not buying a new car.

While it's a subsidy; the benefits don't stop at the first purchase. As long as the subsidy continues, prices for used EVs will stay below prices of new EVs.

You make a great point.

I'd like to learn more about that dynamic of used car pricing. Do you have any pointers?

Here are some thoughts I have which might introduce subtleties:

* At some price level, there is a floor on "good condition used car that will safely take you from A to B",

* A used EV also price-competes with all used cars, and perhaps even with new non-EVs.

They are more like the 2nd/3rd car for the upper middle class. So many in the Bay Area are used just for commuting in EV lanes and charging at work by people who don't need the tax credit.

Are you sure about that?

Just because something is priced in a range that would be affordable to most professionals, liberals or conservatives, does not mean it isn't associated with the elite.

This toilet paper is made of gold... but do you think its the "elites" that are buying it?

http://wsimain.wallstreetinsani.netdna-cdn.com/wp-content/up...

I know 4 people who purchased used Nissan Leaf's for under 10,000 with the tax credit in California. They all make over 6 figures. My conservative neighbor makes less than $60,000 per year, and has a truck that costs that much.

It's not so much the value of the car that determines whether the credit benefits the wealthy or not. This is a tax credit, not just a check from the government. You have to have a fairly high income in order to have a federal tax liability of $7500. A single person would need to make almost $50k a year in order to benefit from the full credit.

That's not a big number by developer standards but it's more than the median household income in the US.

(Having said that I'm for the credit and have already benefited from it twice.)

Buying specialized vehicles is a very upper class thing to do. The middle and lower classes aren't willing to pay new car prices for something unless it can do everything, not just commute or tow their camper or boat.

That's why crossovers, SUVs and half-ton pickups with multiple rows of seating are so popular among less wealthy new car buyers.

Buying a commuter vehicle that can do little else well is definitely an upper class(es) thing.

That's why I said wealthier. As a lot of people pointed out new cars, especially electric, are still something bought by people earning more than average. These aren't yachts but they are still target higher end come breaks.

Even with the tax breaks that include middle class earners benefit the rich more just by the nature of how deductions work. The rich tax payer would have had this deducted income taxed at a higher bracket than the middle tax payer would thus a bigger absolute savings on their tax bill.

http://www.businessinsider.com/us-census-median-income-2017-...

Between 2015 and 2016, US median household income rose 3.2% from $57,230 to $59,039, according to a new report released by the U.S. Census Bureau on Tuesday.

So, yes, the median household income is right in line with being able to purchase a 20k vehicle.

This is not some exploitable loophole abused by the ultra wealthy.

Those will remain

Yeah, thats just the point guys, the middle & middle upper classes lose their deductions and the rich lose the estate tax, it all comes out for the little guy right?

Wake up.

These subsidies were almost on the way out for GM & Tesla anyway.

The qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009)

There is a chart here [1] which shows GM and Tesla hitting the 200k sold mark in about 3 months. Sucks to be Faraday Future, but first-to-market is real.

[0]: https://www.irs.gov/businesses/plug-in-electric-vehicle-cred...

[1]: https://www.pluglesspower.com/learn/forecasting-the-sunset-o...

Why do articles like this always paint reductions in a negative manner? This is actually a positive. The credit should be scraped immediately. The credit was an initial incentive to help encourage drivers to adopt electric vehicles, and it worked very well. Electric vehicles are everywhere especially in major cities; they are huge in my city San Diego. However, now that they are mainstream there is no reason to continue with tax breaks. Electric drivers will continue to drive them, and their share of the market will continue to expand with or without the tax breaks as more people convert. Lets us that tax money to pay for other important things like paying off our debt or funding sustainable energy solutions.

I bought a Prius Prime earlier this year anticipating that such a move was possible.

This would be a real shame, though, because it does help level the playing field a bit given how much our country invests in oil.

I choose the Volt over the Prime and I'm curious if you don't mind, what pulled you towards the Prime?

The Volt was the other serious contender for me (especially given that I live in a state that doesn't generally get the electric vehicles).

Ultimately, it was trunk space that made me choose the Prime. We have one car and occasionally go camping and having more storage in the car was more important than the fifth seat or longer electric range.

"Electric car buyers tend to be wealthier and don't need subsidies"

If that is so why are republicans proposing to cut the estate taxes?

hypocrites.

To be fair ceasing to take people's money and ceasing to give people free money isn't ideologically the same thing (even though both result in people having more money).

Since it's a tax credit, it was also never actually "given" to people.

Good. Both tax and subsidy distort market price and lead to deadweight loss.

And you can't realistically argue that some endeavors deserve taxpayer support while others have to rely on access to financial markets to get over the hump in their runway. The treasury department should not be picking winners and losers. Leave that to investors that have to put some of their own skin in the game.

The minimum damage to the economy occurs when a tax exactly matches the value of negative externalities pushed out onto the public, to be spent exclusively on cleaning them up, and when a subsidy matches any positive externality that the company hasn't managed to capture yet.

It isn't hard to think that any subsidy for electric vehicles should be scrapped, and within the bounds of the same public concern, replaced with a tax on emissions from combustion vehicles, to be used to make those engines already in service less polluting. The tax phases itself out, as people buy new vehicles that pollute less, and as they make already-paid-for repairs and retrofits on older vehicles.

With the subsidy, you have to turn it off manually whenever the desired economic effect has been achieved.

I have no idea what the motivation is behind subsidizing oil & gas. Encourage people to use engines instead of slave labor? Maybe use gas instead of coal? Whatever the reason is, it may have once favored the best side of a two-sided race, but with additional competitors joining the field, it no longer necessarily helps the best of them. That's why taxing the negative externalities almost always makes more sense, because the tax falls away without further intervention when that competitor exits. Like licensing horses to be inside a municipality, to cover the cost of cleanup when they poop on city streets. When people stop riding into town on horses, and start driving cars, the horse tax goes away without further effort.

There is also the possibility that an industry may never get over the hump in its runway. Do you want to keep it on life support forever? And if not, how do you decide when to pull the plug?

I can provide one data point: I drive a 20 year old Honda Civic but I'm looking at getting another car (with automated shifting for spouse). With the $7500 federal tax credit + $2500 CA credit I was considering a Chevy Bolt. Now I'm about 99% certain I won't, I'll probably buy a Honda Civic, now that they went back to making hatchbacks.

I don't know about environmental impact (I bike to work 4 out of 5 weekdays) but that's one lost electrical vehicle purchase. I could have charged it at home for "free" (I have solar panels) but it's way too expensive without the credits.

Curious if this would impact the yet-to-be-produced Tesla Model 3s or if it would only discourage future automakers from manufacturing EVs?

Some of the Model 3s, it is per manufacturer and begins to phase out after 200,000 vehicles.

https://www.cnbc.com/2017/07/28/tesla-is-running-out-of-fede...

So people at the front of the line would be eligible for the full amount.

The ongoing drop in battery costs is likely a bigger factor than the rebate though.

Right, I knew it started to phase out (over 6 quarters) after the 200,000th US delivery. My question was more if this proposed legislation could terminate the EV credit entirely, or it would prevent new automakers from taking advantage of it.

As a Model 3 reservation holder, I was under the assumption that getting the EV credit was not a guarantee.

It's not, but it won't be phased out until later in 2018 based on anticipated production volumes, and if no government action happens.

I love electric cars but I do not think it is fair for my money to be taken to subsidize a car for someone else. I had no say in the matter. The same goes with solar subsidies. If you want an electric car or solar, you should pay for it, not the taxpayer.

The correct solution here is not to get rid of the credit, but to introduce a phase out as income rises, so middle class car buyers benefit, but wealthy car buyers don't.

But that won't happen because the real goal of the proposal is to support the oil and gas industry, not to remove a subsidy to wealthy car buyers. As the article states, even the auto industry has come out against this.

That's what I don't understand in all such proposed policy changes, the discussion is phrased as A or B (with people arguing on either side) when in practice there are many other possibilities, some win-win others giving an acceptable compromise.

In addition to the down-votes, can someone explain to me why they think a high income phase-out of the EV rebate is not preferable to eliminating it altogether, especially if the objection to the rebate is that it subsidizes car purchases by the wealthy?

How about CO2 taxes on fossil fuels then?

Or even just fuel taxes that are sufficient to maintain vehicle infrastructure.

My fuel is already taxed - I pay about $0.59 tax per gallon in Virginia.

In Germany, you'd be paying $6.14 tax per gallon.

Ok, you get taxed more on fuel. Good for you.

There's starving kids in Africa. They have it worse than kids in the US but they aren't more than tangentially relevant to a discussion on hunger in the US.

Your European fuel taxes are of similar relevance to this discussion about fuel and transportation taxes/subsidies in the US.

6.14/gal a wonderful example of an amount of taxation I never want to see on a gallon of anything short of liquid cancer in the US. I'm convinced that we can reach a far more efficient way to implement carrots and sticks.

> I'm convinced that we can reach a far more efficient way to implement carrots and sticks.

What dollar value do you assign to the human and economic cost that any one pound of CO2 will produce over the next century? How did you come by this number?

If you haven't, then you're just going with your gut feel. Gut feel is a terrible way to judge whether or not policy is good, or not.

What if the economic cost of burning that gallon of gas is $10? Would applying that externality to the price at the pump still churn your stomach?

If you don't want to assign a greater or equal cost to it, then the most efficient solution for the market will be to keep polluting, causing net harm. Robbing Peter to fill Paul's gas tank.

Taxes are even less palatable than subsidies. A carbon tax is a great idea, but before you can implement it, you have to fight the people who hate taxes, the people who hate environmentalism, and the companies whose products you're now directly attacking. Subsidies for the alternative are a compromise solution meant to work around the unfeasibility of passing a carbon tax.

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