90%* Of Federal Plug-In Electric Car Credits Went To U.S.’ Wealthiest Residents

SEP 8 2015 BY MARK KANE 95

The Refreshed 2016 Cadillac ELR Was Scheduled To Debut (Again) Last Month In Geneva.  Only The 2014 Made The Platform

Cadillac ELR

Incentives for plug-in cars are under fire.

After California’s decision to make state rebates depend on income, now the federal tax credit is put under scrutiny, because most of the tax credits apparently went to the U.S.’ wealthiest residents.

Severin Borenstein and Lucas Davis from Energy Institute at Haas, University of California, Berkeley released a study The Distributional Effects of U.S. Clean Energy Tax Credits, which shows that 90% of plug-in car credits were received by those with highest income.

In fact, the phenomenon is the strongest for plug-in cars tax credits.

Abstract
Since 2006, U.S. households have received more than $18 billion in federal income tax credits for weatherizing their homes, installing solar panels, buying hybrid and electric vehicles, and other \clean energy” investments. We use tax return data to examine the socioeconomic characteristics of program recipients. We find that these tax expenditures have gone predominantly to higher-income Americans. The bottom three income quintiles have received about 10% of all credits, while the top quintile has received about 60%. The most extreme is the program aimed at electric vehicles, where we find that the top income quintile has received about 90% of all credits. By comparing to previous work on the distributional consequences of pricing greenhouse gas emissions, we conclude that tax credits are likely to be much less attractive on distributional grounds than market mechanisms to reduce GHGs.”

2015 Nissan LEAF

2015 Nissan LEAF

Well, it should be obvious that bulk of incentives would go to the wealthiest residents because you typically need to have high income qualify for the credit, be able not only to buy new car, but buy an electric car – initially more expensive than ICE – and have a home to charge it.

What this report fails to acknowledge, because it is based on personal tax return information only, is that the bulk of the plug-in incentives that are claimed in the US are actually through leasing, especially in the 2006-2012 timeframe before Tesla Model S sales really took off.

In a leasing scenario, the OEMs themselves claim the credit on behalf on the leasee, and that is where the bulk of the credits have actually gone – not to the wealthiest Americans.

Additionally, in those leasing scenarios, the consumer that is acquiring the plug-in vehicle is far more likely to not be in the “top income quintile” than the subset that buys the vehicle outright, then waits to claim the credit on their taxes.

We would argue that without the federal tax credit, plug-in sales would be much lower in the US.  Today,  the ‘everyday average consumer’ can choose between a multitude of $249/month (or less) lease deals on EVs that otherwise would not exist.

Back in the “early days” of EV sales in the US (2012 and before) the option to buy a plug-in outright, such as the Chevrolet Volt, (then claim the credit later) would easily set a consumer back $700+/month on a 5 year term, while a 36 month lease could be had for less than half that amount thanks to the $7,500 federal incentive drastically reducing the cap cost.  It is no wonder then why so many Americans who have chosen to buy an EV, have done so within the structure of a lease.

But there is also a second side to those wealthier persons who do choose to purchase, because after a few years the wealthiest residents will sell their plug-ins and prices on the used market are already adjusted to $7,500 tax credit, so part of the incentive will sort of fall on the second-hand buyers right?

There is one more important thing. If $7,500 tax credit gets limited to the less wealthy, sales of new plug-in cars (especially popular $25,000-$35,000+ cars like Nissan LEAF and Chevrolet Volt) will surely plunge and over time prices of used electric cars will go up.

Figure 5: Average Credit Per Return, by Adjusted Gross Income

Figure 5: Average Credit Per Return, by Adjusted Gross Income

Source:  Check out the entire paper – The Distributional Effects of U.S. Clean Energy Tax Credits via Green Car Congress

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95 Comments on "90%* Of Federal Plug-In Electric Car Credits Went To U.S.’ Wealthiest Residents"

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People with money by expensive cars? No way!

The wealthiest households are the ones willing to a pay a premium for EVs and take risk on a new technology?

The “willingness” to pay the premium and accept the risk is not linked to wealth, I’m willing to do it as well. I believe you should state that the “ability” to do so rests with those more well off.

Increase the Tax on Petrol / Gas and cut the Credits. It will work.

In order to be able to claim the credit, you basically have to be able to afford to buy the car without the credit since you don’t get the credit right away. If it were converted to a point-of-sale rebate of some kind, then it would be able to help a lot more people.

Good analysis, good idea.

Actually, while the motivation could be arguably good it seems the analysis – like so many of EV-related studies – is dominated by fallacies, and uses irrelevant data.

Check out this site’s sales scorecard: Through 2012, barely 70,000 EVs were sold in the US, a solid majority of them plug-in hybrids.

That’s less than 20% of the EVs on American roads today. So they looked at the very leading edge of early-adopters, before Nissan dropped the price on the Leaf and moved to sell it mostly via leases, before GM did a similar thing with the Volt.

Additionally, there’s the basic fallacy underlying this as well as the various “footprint” analyses: evaluating what is a brand-new technology not even halfway through its first generation, as if it was a mature technology with all its aspects – technological, environmental, social – being already fixed.

As a case in point, as this study comes out, in many local US auto markets, you can find a great used Leaf for $10k. Yes, it is a variant of “trickle-down”, but it does work for the middle and working classes: the tax incentive words to reduce the second-hand Leaf’s price.

Sounds good but leasing effectively achieves this result now, so I think the impact would be minimal. In this sense the study is flawed because, by using the income of people filing for the credits, it’s not capturing who is actually benefiting from the credits in a situation like a lease (would be true for electrics as well as solar).

That idea has been suggested many times. And I certainly agree with it.

But that makes it much harder politically. With the current ‘tax-credit’ system, you can just say that EV buyers “Get to keep more of their own hard-earned money”. Whereas if you switch to a rebate system, people will scream that it is ‘welfare for the rich!’.

Yes, I know, in reality there is not much of a difference. But political optics of it are big.

I’ve often thought an additional tax of $7,500 on the owner of a car that is not an EV pr PHEV would be much more powerful incentive. Perhaps that would be more palatable? I suspect it would be way too big an incentive but perhaps there is a better way to do it? not sure. The benefit in kind tax for company cars (UK) was a sliding scale of the % of the value of the vehicle for company cars, that seemed complex but pretty powerful. Adding 25% of the value of a car to your tax bill (petrol Outlander) vs 5% (PHEV outlander) is a pretty big incentive and it gets bigger for your higher end vehicles. IMO, this is the cause of the sales wave of the Outlander PHEV in the UK and is one of the reasons we are seeing so many company car PHEV’s hitting that particular market (i.e. Porsche, BMW, Merc, etc..) I don’t know if in the last UK budget they scrapped this, real shame if they did. BTW for what it is worth, I don’t have a moral objection to rewarding rich folk (as the current system in the US will) by reducing… Read more »

Yes. And it’s the working and middle classes who need the fuel savings from plug-ins the most.

Rich is smart with their money is like saying water flows down.

Rich became that way by taking risks and being smart with their money. EV is a risk, even with fast chargers alleviating much of range anxiety. Taking almost 40% off by buying EV (such as SparkEV) is being smart with money.

The poor/average Joe/Jane are very risk averse. This is especially so when people tell them crazy nonsense about EV, such as you can only drive 80 miles before having to charge 8 hours and that EVs are expensive without researching that fast charge is only 20 minutes and SparkEV with poor/average subsidy is actually cheaper than Spark gas version: $25K-$7.5K(fed)-$4K(CA)=$13,5000

Why poor/average people don’t take $11,500 to buy quicker, more “fuel” efficient car that needs virtually no maintenance for less money and lease that’ cheaper than $1500 used car ($5400 SparkEV lease payments – $4000 rebate = $1400)? Who’s John Galt…

The data shows the rich became rich because they inherited it, with dumb rich kids far more likely to get a college degree than smart poor kids.

Not sure whether lower income people are more risk averse. I doubt it. Do lower income people buy lottery tickets?

Equating lottery ticket to taking risk is absurd. Lottery ticket, much like slot machine, is designed to make its users lose money. If Warren Buffet bought lottery tickets with all his money, I wouldn’t call that risk taking, but foolish waste of money.

I think you nailed it. the poor waste their money foolishly.

By the way, what data shows rich are inhereted? Forbes did a survey of billionaires, and about 60% came from less than million/yr households, about 30% came from less than $100K/yr households.

Besides, $60K/yr family income for full EV subsidy hardly qualify as rich.

What data? Seriously? I could cite dozens and dozens of serious studies, but let’s just go with Wikipedia. https://en.wikipedia.org/wiki/Social_mobility The US has a lot of income inequality and very low social mobility.

I myself have shown the math and benefits of leasing the Spark EV to many and most have been highly resistant to the thought that this could be a good deal. Some have even gone on to buy used cars with poor gas mileage even when they drive less than 50 miles a day 99% of the time.

I feel like someone waving a flag at a cliff’s edge trying to stop traffic, but being ignored.

People look at the short term not the long term. Yes, in the long run, and EV is cheaper. But that’s the long run. People see that high up-front price tag of an EV and are scared off.

I wish that they would take the rebate off at the point of sale and not off your taxes. It forces people in my financial situation to lease or buy used only. I’m excited by this technology and tax rebates as they are now do more to discourage me from making a new EV purchase.

Lease first, then buy the car after the lease expires.
You may get two good deals.
This works well for the Volt.

First adopters:
1) Can afford the risk.
2) Partner with government to DRIVE DOWN the Cost of a New Technology.
3) The top 20% would be replacing cars with high gas appetites, and would benefit more.
4) The benefits to the nation are still the same:

A) Drives down the cost.
B) Reduces the risk to first time buyers.
C) Cleaner Air in city and suburbs.
D) Energy usage switched from Foreign Imports to US Domestic Producers = Greater Economic Growth for AMERICA.
E) Addresses climate change, pretty much the ONLY thing the government is doing to address climate change, because coal is being driven out of business by natural gas drilling, a heavy methane leaker.

So, First Adapters Thank You, You’re the REAL AMERICANS who Take on Risk and Make America GREAT.

That’s a great point. Society gets the same benefit. However, you have to ask whether the existence or lack of a credit would really stop or prompt someone buying a Model S for $125K.

Chevy Cruse mpg vs. a Volt.
Jag mpg vs. a Tesla.

The Cruse to Volt has a bigger paper difference.
But, the Jag to Tesla will probably deliver a bigger real world difference, because who drives a Jag like a Prius?

Something else they didn’t take into account is all of the people buying used plug-ins that already have the price of the tax credit baked in.

When you dont pay taxes, you dont get credits. When you pay 20k, 50, 100 or more thousands in federal income tax, you get this little break. So, what?

$7500 tax is for people making about $50,000/yr, lower than median wage. Over half the population would qualify for full tax break, yet very few take advantage of it.

In addition, state subsidy is MORE for lower income. In CA, you qualify for $4000 rebate if you make less than about $60K (family of 3), $2500 if you make more.

Combined fed+state, most people would qualify for $10,000 savings, some qualify for $11,500 savings. That makes cars like SparkEV cheaper than Spark gas version, and EV is quicker and better handling, too.

You need ~$50k of taxable income. That’s not wage/salary. There’s a big difference.

Most people who have lots of deductions would have higher income and tax more than $7500. Singles would pay $7500 in taxes with taxable income as low as $45000/yr.

You said that they just need to make $50K/year, but it’s really much more than that. Even if you just take the standard deduction that’s $6,300. Then any money you put into a 401k or towards social security, medicare, etc are not taxed.

Fine. Make it $50K/year in taxable income. That’s still qualifies roughly half the tax payers for fulll federal EV tax credit.

Again, HUGE mistakes based on invalid assumptions. 1st thing 1st – family car is NOT an investment. Thus, with good financial planning, no one should consider “let me set aside X amount taxable income so that I can get a federal tax credit for buying a qualified energy efficient vehicle, ” instead of “how much tax refund check can I get from IRS at end of tax year?” Now that we’ve gotten that out of the way… For “regular” family, with GOOD/SMART financial planning, there are so many ways to avoid paying taxes upfront (in the form of credits, deductions, etc.). 401K, 529K, health plans, drug plans, mortgage, joint (married), kids, schools, donations, company stocks, etc. After all those, you probably will get a check from IRS by end of tax year. What you are suggesting, SparkEV, is to let IRS to tax you at least $7.5K, only to get $7.5K back, on an item that will makes you no extra money in the future, unlike, say, 401K or 529K. IOW, you pretty much have to max out all your tax payment avoiding methods, and still have a sizable chunk of money left (for food, bills, etc.), so that you… Read more »

No doubt, easier subdisy like point of sale is better. Even forwarding tax credit to future years would help the poor, who own more polluting and less efficient cars.

People pay roughly 20% in taxes. At $7500 * 5 = $37,500. It’s not that simple due to loopholes like 401K and mortgage. But most people who pay taxes pay more than $7500 per year in taxes. This does not count people who don’t pay federal tax (almost 50%).

There is no way half of taxpayers have 50K of taxable income. Heck, I think the median household income is only $50k. No time for me to search now, but Google is your friend.

Avg tax from 75K to 100K income = $8956
Avg tax from 50K to 75K income = $5634

http://www.fool.com/investing/general/2015/01/31/the-average-american-pays-this-much-in-income-taxe.aspx

Median figures are harder to google.

Here’s another data from 2011. Top 50% is 68 million filers. Taxes paid was $1,012,460 million. Divide and you get ~$15K. Still not median, though.

http://taxfoundation.org/article/summary-latest-federal-income-tax-data

You’re not doing it right.

LOL sparky … you have this one wrong as well.

You calculated that the top 50% of tax payers on average pay $15K every year. Yes, this is enough for a $7500 credit, but look at the rest of the story.

The same calculation for the bottom half of taxpayers yields (hang on to your seat) an average tax payment of $442. Hint … this number is less than $7500!

And then the very poor do not file a tax return at all.

The point of incentivising the purchase of plugins ISN’T to help poor people by EVs! News flash, they won’t generally buy EVs anyway (see other comments here).

The point of the incentives is to help the manufacturers sell plugins, then as they start to gain economies of scale, the price will come down, along with perceived risk. Then guess what, more people with lower income will start to buy plugins too.

Why poor people don’t buy EV is a mystery. Post subsidy price of SparkEV is cheaper than Spark gas version. Post subsidy parkEV lease is cheaper than $1500 used car. SparkEV is quicker and cheaper to operate than any car under $20,000. Yet sales aren’t there. Why?

It’s not a mystery at all. EVs are expensive.

$1500 for 3.25 years is expensive? If poor buy used car for $1500, repair bills could easily double that, not to mention maintenance and gas.

Well, in the case of the Spark EV, it’s only available I think in California, and maybe one or two other states, unlike say, the Nissan Leaf, or even the Chevy Volt. So that’s probably why it’s hardly registering on anyone’s radar.

That said, I think a lot of people are a bit risk-averse towards EV’s and plug-ins because they either can’t plug it in, such as apartment dwellers, they just don’t understand the technology, or they do, but are afraid of premature battery failure such as with the Leaf in very hot climates.

While what you say is true in most parts, but Leaf is bad example. It doesn’t have liquid cooled battery thermal management like SparkEV. Blowing hot air over battery doesn’t count.

Still, it doesn’t explain fully (FULLY!) why people don’t buy EV in CA where there’s lots of public fast chargers.

SparkEV, you are missing the big picture by only looking at one factor. This is no mystery.

Most EV households (like myself) also have a reliable car that can be used on long trips. One of the costs of having an EV in USA today is that you cannot skimp on the second car, which is something that poorer families often do.

Mandatory second car is a fallacy. I thought so, too, so I kept my gas guzzler. But with fast chargers, I haven’t driven the gas car in months even with 200 mile trips. I guess this is something that need convincing for people who’s never experienced SparkEV.

SparkEV, you sound like a stuck record today. Pounding us all with the same message over and over again does not improve it. Reality is more nuanced than the simple mantra you are repeating on this page.

For instance, you and I both have a second car in addition to an EV, even though you declare that need to be a fallacy. And how you can call something a fallacy with no idea about my family or our needs, is unreasonable.

Your comment is just wrong. Stuck records behave this way. Reasonable people do not.

Which of my comment is just wrong?

Oh, I could go to town with such an open ended question, but I will not!

Read my second post carefully, especially the second paragraph, and it should become clear to you.

SparkEV said:

“Why poor people don’t buy EV is a mystery.”

There is no mystery at all. EVs are nearly always a second car. The poor are less likely to have a second car, and when they do, it was almost certainly bought used. This new generation of mass produced EVs hasn’t been around long enough for many used EVs to be on the market.

The only mystery here is why any informed person would think there is a mystery.

The paper should have at least done a demographic comparison of regular car buyers at the same price points.

If a person cannot afford to buy a car, it doesn’t matter if it has a plug or not.

And a new car. Lots of people buy used.

Cars like SparkEV lease is cheaper than $1500 used car. Why people don’t get EV is not because EV are perceived expensive (or poor performing). I suspect it’s the FUD spread by gas car idiots.

SparkEV lease = $139/mo * 39 mo = $5400
CA rebate for poor = $4000
Total lease that include maintenance = $1400

This is without federal tax credit.

For those making more than $65,000/yr, rebate is only $2500, so total lease cost for new car is $2900. Again, without any federal tax credit.

Spark EV may not be big enough for some. Also it’s not sold nationwide, only in a couple of states.

Not big enough argument can be made for any car, not just EV. But SparkEV is best car for the money IMO (quickest car under $20K, quickest and most efficient EV under $30K). It’s a shame SparkEV is only sold in CA/OR (and MD and limited Canada soon).

Exactly.
The Tesla isn’t going to replace a Chevy Cruse, it’s going to replace a gas guzzling Jaguar, so, we all benefit.

GIGO -(Garbage in garbage out)
Individual tax return data will not include leases. Since such a large percentage of EV’s are leased, this study is nearly useless.
What percentage of Spark EV’s are leased at $139/m vs purchased?
Plus this study only goes to 2012 and the marketplace has changed dramatically with many more low cost EV;s available (smart fortwo, Spark EV, etc.)

SparkEV lease = $139/mo * 39 mo = $5400
CA rebate for poor = $4000
Total lease that include maintenance = $1400

This is without federal tax credit.

For those making more than $65,000/yr, rebate is only $2500, so total lease cost for new car is $2900. Again, without any federal tax credit.

You’ve repeated the same message several times, so I’m going to reply to you just once, to show you the big mistake you’ve made, based on few utterly incorrect assumptions. I’m listing 2 of those.

You equated lease payment a better deal than buying used, for the poor.

Have you ever considered the credit rating for the poor?
Have you every considered job/income stability of the poor?

Fine prints on those special lease – for people with high credit ratings, usually 700+ (or even higher than that).

That’s why they buy used and pay a 1 time payment. They don’t have to worry about lease payment (or finance payment) a month later. In fact, some of them have been driving with expired tags and/or no insurance…but they can still drive because their vehicles won’t be repossessed in the case of leasing/financing.

If you follow the logic of bad case where potential poor buyer has bad credit, why stop there? There are lots of poor with no money to buy any car at all. Even with somewhat poor credit, they can qualify for higher lease payment that would be cheaper than most used cars.

My point is poor or avg who can afford a car would do better by leasing SparkEV than buying a used car for $1500. Obviously, if they aren’t able to get the deal, they can’t, just like if they don’t have $1500 to buy a used car, they wouldn’t buy one.

Your arguments are based on what you think the poor “ought” to do. Londo Bell is pointing out what they actually do.

Your arguments are as pointless as swimming against the tide, and Londo is entirely correct.

And also, arguing that “the poor” ought to buy a car sold only in compliance numbers, like the Spark, is pretty silly. No compliance car is going to have statistical impact on what the average person either can buy or does buy.

This might explain the “jump to conclusions” style used.

On the first page, “Energy Institute at Haas working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to review by any editorial board.”

Would like to see this graph of new EV sales with lines for new and used car as well as used ev sales.
(Would bet the new car sales would trend nicely and used ev sales would trend closer to used car sales.)

Well yes, it’s true that a tax credit system requiring relatively high incomes benefits high income taxpayers. No doubt the same conclusion would hold true for the solar tax credits.

In addition, lower income people are less likely to own homes — more likely they live in condos or apartments — or be able to afford 240v charging stations.

Finally most people apply an overly high discount rate to the purchase of money saving devices. Now this is less true as gas prices have dropped, but what we learned is that even with gas prices high enough to make EVs a good deal because of low running costs, people didn’t respond to the economics. They wanted to make the extra money the EV cost back in six months rather than two or three years. This happens for all clean energy products BTW, not just for EVs.

Tax credit is not for the rich. You pay $7500 in federal tax when your income is about $45,000/yr (single), $60,000/yr (family of 4).

With cars like SparkEV, you can fast charge at market in 20 minutes. I mostly charge while at market, etc, and hardly charge at home, so home ownership is not required for convenient charging.

Post subsidy SparkEV is cheaper than Spark gas version, and lease is cheaper than $1500 used car (in CA). It’s also quicker, better handling, gets 70 MPG when only using public charging when gas is $3.50/gal (or same as Spark gas if gas is $1.75/gal). Basically, you save money even without gas savings and saves more money operating, yet it has not taken off. Why?

I make a little bit more than that, have no dependents, and I do not qualify for the full $7500. You are probably thinking about taxable income.

I was asked about this several times already. I don’t know why this isn’t obvious, but yes, it’s taxable income. You hear about millionaires paying no taxes, so to think this is income without regard to tax seems obviously absurd.

So the people who pay the most in taxes got a little rebate, how horrible…

While at the same time, they sponsor new and expensive technology so that it can come down in price for other people to afford it.

Looking only at the incentives for a new car purchase is a bit of a red herring. Incentives benefit the first purchaser directly, but they also benefit the succeeding purchasers indirectly by creating used cars, which are significantly cheaper. I’m starting to shift my EVangelism focus into letting people know there are gobs of perfectly good used Leafs, Volts, et al. coming on the market at low prices, and helping them figure out what model years and what trim levels had what kind of charger, etc.

Well, seeing as you have to owe $7500 or more to the IRS to even qualify, it makes sense that the wealthy use the credit the most. I know I don’t qualify for the full $7500 credit.

Also, consider all of the leases. NMAC, for instance, claims the credit on all leased LEAFs. Ford Credit does as well for all Energi and FFE leases. Banks aren’t exactly poor.

“Study finds tax credit used by people most likely to have tax obligations”

If you don’t qualify for for full tax credit, your entire tax bill will be credited. It’s unfortunate fed doesn’t want to help low tax payers, who are mostly low income earners, by forwarding the credit. But it’s better than nothing.

Leasing companies take the tax credit, but the residual (ie, resale value) shows roughly the similar amount discounted. You can take partial credit and buy, or you can lease first then buy and take indirect savings. Or you can just lease at $500/year ($1400/3.32 years) like in CA.

I gotta love how the residential energy and AFV tax credits have turned the political left into fans of trickle-down economics!

“Trickle down economics” is the rich man’s lie that if the rich get richer, they’ll create more jobs.

One only has to look at the way the very rich, the 1%, have gotten much richer over the past 30 years, while the middle class has shrunk and had its average wages lowered, to see how utterly false that is.

What in the world does job creation, or lack thereof, have to do with using tax money for stimulating development of a technology which will eventually wean us off burning fossil fuel for transportation?

Nothing, nothing at all. So your comments here are completely irrelevant to the discussion, aren’t they?

It would be foolish if you had 80 to 100 an thousand annual income and not use the credits. I am sure these individuals also have used solar credits so they can drive on solar electricity. They are really saving money and also keeping away from expensive auto mechanics

There is no doubt that political forces are behind this, and that this will be used to justify killing the federal EV tax incentive.

The fight over the FY2016 budget authorization is just 3 weeks away, which must be passed by Oct. 1st, or they shut down the Federal gov’t.

The timing of this is not coincidental.

Very simple solution. Cars over $35,000 do not qualify for any subsidy. Bottom line is that Richie Rich will buy the car even if it does not come with a subsidy because he can afford it. Will he take the subsidy if it is offered? Of course he would. This will also drive the companies towards lower cost vehicles, not exotic sports cars.

Next, provide up to $15,000 POS rebate to a person/couple with incomes up to 20K taxable and phase out by $50K taxable. Anyone with over $50K can afford a $35,000 car. They do it all the time.

If we all pay our taxes, why should any one demographic be punished by disallowing them to participate?

Independent Observer said:

“Very simple solution. Cars over $35,000 do not qualify for any subsidy.”

This is a “solution” to what, exactly? The “solution” to making sure that the one company doing the most to push forward the EV revolution, Tesla Motors, does not get to feed at the trough which was intended to push forward the EV revolution?

The purpose of the EV tax incentive is not, repeat not, to benefit taxpayers, either rich or poor. It’s to benefit those building and selling EVs. Any benefit to individual taxpayers is a side effect of the incentive.

Trying to change the system to pick and choose which taxpayers benefit from this windfall would be short-sighted and counterproductive.

The fact that they have to change it means it was a flawed implementation in the first place.
We’re being run by idiot politicians.

It should be available for all and all should get the same amount. There should have never been an income or Tax criteria PERIOD!

Make at point of Sale and it will produce more sales.

These tax rebates do not get the the actual dollar per dollar value. If you are able to write off $7.5K, will that equate to $7.5K back for you in return taxes?

Nope.

I’m sorry to state the obvious, but given that you need to pay at least $7500 in federal taxes to maximize them, one would assume that you would need to make (given average write offs) somewhere in the field of at least $70,000 a year as an individual ($110,000 as a family) to even qualify for one, so yeah… DUH Thank you captain obvious.

You qualify for tax credit even if you only paid $1 in tax. $7500 is the maximum amount, not the qualifying amount. If you lease SparkEV for $139/mo, the residual is about $7500 less: $26K new, $13K residual after 3.25 years lease.

A mere $1 rebate on buying a car isn’t going to influence anybody’s buying decision. The bigger the rebate, the more likely it is to influence a buying decision.

So once again: The idea that the rich are more likely to take advantage of the EV tax rebate is… Duh!

Furthermore, new car sales almost always go to those who make better money. The poor just don’t buy new cars. The government had to know that any incentive to promote the EV market would no doubt be targeted at a group of people who can afford this first gen product. That’s not to say that it wasn’t bad policy, but in many ways it had to target this group. I’ve always though (and I’m a Republic) that a more equitable way to do this would have been to give a higher ($10K) Federal rebate payable soon after purchase. Rebates are taxable income so if you had less money in income, you might realize nearly all of this $10K, but if you were at the highest tax bracket, you would likely only realize about $6K of it post tax.

Hmmm… what did they expect?

The poor probably spent most of their money on housing, food, and gas, leaving them with very little money left over so they generally buy used cars that are highly depreciated.

It would be interesting to see statistics comparing the household incomes of new gasoline car buyers versus new electric car buyers.

New Rolls Royce buyers and Leaf buyers could be compared as well.

I wonder about the debate if it ever comes to incentives to buy electric private jets or Yachts? Only the rich can buy those! The poor benefit cleaner air and water too! It helps in getting them a future electric 737 seat!

If only pollution was not free we wouldn’t need to have these debates.

Please get this right; this is an indirect pass through subside to the manufacturer, not to the buyer. The buyer gains no money in the deal. The rich buyers are getting no money from the Government.

The idea is to allow the manufacturer to recover development and up-to-speed costs by including a premium in his pricing.

For example; You buy a new Leaf for $28,000 with $10,000 in offsetting incentives when you could buy the ICE equivalent ‘Note’ for about $18,000.
You pay the dealer the full amount and then apply for the incentives from the Governmental agencies. In fact, if you lease the car, some incentives are available directly to the dealer upon signing the lease.

Nice point.

Too bad, however, that the $7500 isn’t applied at the point of sale as a reduction to the cost of the vehicle instead of as a tax credit.

Early adopter tech is mostly bought by the rich. Why should this be a surprise to anyone?

As a reminder: The purpose of the EV tax rebate is to help EV tech transition from the early adopter stage to the point where they can fully compete with gasmobiles. If and when we get to the point that most of the tax rebates do not go to the rich, then it will be time to end them.

I’m certainly no fan of how the 1% crowd has rigged the financial and tax system to benefit them at the expense of the middle class and working poor, but anyone who opposes the EV tax rebate based on the idea that it’s “unfair” because it favors the rich, is ignoring reality pretty firmly.

+1000

Exactly. The tax code is chock full of crazy irrational tax-breaks for rich people. At least this one benefits EVERYONE since everyone has lungs, right?

+1

IMO

You do something that benefits the nation you should be taxed less, opening an off shore bank account should result in more tax, buying an ev, donating blood, volunteer work, etc. less tax.

I understand this is currently being corrected at least in Califoria by factoring in the household income. This was probably needed as low fuel prices AND being badged as a rich man toy is unneeded headwind for EV’s.

We had this same argument last year. And in 2013, 2012, 2011, and 2010.

Wait . . . people with large tax liabilities are the ones that do things in order to qualify for tax-credits?!?! I’m shocked.

Imagine that . . . the tax system works as intended. The tax system is getting people with money to invest into clean energy and clean car systems!

It is worse than you think. All new cars tend to be bought by people of higher means. The results above may well not be skewed at all…