
House Republicans propose to scrap $7,500 electric vehicle credit - rippsu
http://www.reuters.com/article/us-usa-tax-vehicles/house-republicans-propose-to-scrap-7500-electric-vehicle-credit-idUSKBN1D2282
======
rukittenme
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...

~~~
belltaco
>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.

~~~
rukittenme
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.

~~~
olympus
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.

~~~
slowmovintarget
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.

~~~
olympus
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.

------
Cshelton
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...

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

~~~
Cshelton
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...](http://www.imf.org/en/News/Articles/2015/09/28/04/53/sonew070215a)

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.

~~~
thomaskcr
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.

~~~
ellyagg
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.

------
ghouse
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.

~~~
NeonVice
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...](https://www.forbes.com/sites/drillinginfo/2016/02/22/debunking-
myths-about-federal-oil-gas-subsidies/#cbd6cf06e1cd)

~~~
lostlogin
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?

~~~
SilasX
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.)

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

~~~
SilasX
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.

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

------
stusmall
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.

~~~
smileysteve
> 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.

~~~
dogruck
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.

~~~
smileysteve
> 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.

~~~
dogruck
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.

------
fishcolorbrick
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...](https://www.irs.gov/businesses/plug-in-electric-vehicle-credit-
irc-30-and-irc-30d)

[1]: [https://www.pluglesspower.com/learn/forecasting-the-
sunset-o...](https://www.pluglesspower.com/learn/forecasting-the-sunset-of-
federal-tax-credits-for-evs/)

------
PatientTrades
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.

------
dangoor
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.

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

~~~
dangoor
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.

------
Kyragem
"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.

~~~
mythrwy
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).

~~~
matt4077
Since it's a tax credit, it was also never actually "given" to people.

------
logfromblammo
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?

------
d1zzy
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.

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

~~~
maxerickson
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...](https://www.cnbc.com/2017/07/28/tesla-is-running-out-of-federal-tax-
credits-for-car-buyers-edmunds.html)

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.

~~~
meritt
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.

------
rusher81572
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.

------
danans
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.

~~~
danans
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?

------
kozak
How about CO2 taxes on fossil fuels then?

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

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

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

~~~
dsfyu404ed
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.

~~~
vkou
> 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.

