Electric Vehicle Tax Credits Benefit Select Few, Burden American Taxpayers

An Edgetorial by Tom Palace

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If you’ve seen or heard the hum of electric vehicles (EV) charging near you, it’s due to a select group of automobile manufacturers currently lobbying Congress to expand the EV tax credits and create a permanent subsidy for their products.

These credits – which give purchasers of EVs a $7,500 tax credit – were originally created to incentivize Americans to purchase environmentally-friendly cars, but have now become a crutch that EV manufactures depend on to reach their bottom line. The truth is that despite these subsidies and rebates, a vast majority of consumers still aren’t buying EVs. Recent EIA data shows plug-in hybrid electric vehicles (PHEVs) only reached 0.05 percent of light-duty vehicles sold in 2017 and battery electric vehicles (BEVs) accounted for just 0.06 percent.  

Currently, this tax credit only applies to the first 200,000 cars an EV manufacturer makes in a year and then the credit is phased out after 6 quarters and expires. However, if this extension is granted, it means our government is choosing to prop up a declining market at the direct expense of American taxpayers.

Furthermore, this extension would have a disparate impact on low-income consumers. This is because subsidies for electric vehicles and infrastructure are paid by all taxpayers, despite the fact that only the inherently wealthy can afford to purchase EVs. In fact, a 2013 analysis found that Tesla buyers had an average household income of $293,200. Additionally, a 2015 study found that buyers of the lower-cost Ford Focus electric vehicle had an average household income of $199,000. To put these numbers into perspective, the 2015 median household income in the U.S. was $56,516. Therefore, if the EV tax credit extension is granted, a disproportionate share of the costs of EV subsidy programs will continue to be borne by lower-income taxpayers.

Clearly, it’s in the best interest of the general public to repeal the EV tax credits and there are already efforts in place to do so, such as U.S. Senator John Barrasso’s (R-WY) Fairness for Every Driver Act. If we don’t, we are essentially allowing the government to control which products succeed in the marketplace rather than American consumers. That mindset is in direct contrast with the free market principles this country was built on and it’s up to Congress to right that wrong by putting an end to this hand out.