The case against electric vehicles: Should average taxpayers be subsidizing EV purchases that mostly benefit high-income Americans? | American Enterprise Institute - AEI
Kill all subsidies. "In an op-ed in the Washington Examiner “Taxpayer subsidies for electric vehicles only help the wealthy,” I make the case against EVs: Electric vehicles have been popping up in driveways, parking lots, and roads across the country for the past decade or so. Proponents of the electric vehicle revolution are wondering what’s taking the rest of us so long to follow suit. The reality is that the rest of us are already doing a lot to support the adoption of electric vehicles. For example, taxpayers fund the federal electric vehicle tax credit program, which grants up to $7,500 for qualifying purchases. States such as Colorado offer an additional state income tax credit of $4,000, and New Jersey just passed legislation for a new $5,000 state rebate in addition to an existing sales-tax exemption for electric vehicle buyers. The nation’s teachers, nurses, and factory workers are all paying higher taxes for a program that generously benefits those who buy electric vehicles. Electric vehicle sales have grown in recent years, and cars such as the Tesla Model 3 have made the market a bit more affordable (though not much) for everyday people. But data show most of those who claim the electric vehicle tax credit earn far more income than the national average. In fact, people with annual incomes of $100,000 or more have claimed nearly 80% of federal electric vehicle tax credits, and about half of all sales take place in California. Taking a deeper look at the issue means asking ourselves an important question: Should average taxpayers be responsible for subsidizing electric vehicle purchases that overwhelmingly benefit high-income earners? Also, what about the issue of infrastructure costs for charging electric cars? Last week, Democratic Reps. Alexandria Ocasio-Cortez of New York and Andy Levin of Michigan announced a plan to install a national network of charging stations within five years. Levin told Reuters the charging network would be “expensive,” but he believes it will ultimately result in the “broad-scale adoption of electric vehicles.” But until manufacturers are able to bring down production costs and the price consumers pay, without the help of generous taxpayer subsidies, widespread electric vehicle adoption may never occur, charging network or not. Even if widespread adoption does occur, there are inherent issues with the nation’s transportation system that would need to be addressed first. Chief among those issues is that electric vehicle drivers use our highways, roads, bridges, and tunnels for free. The rest of us pay gasoline taxes — 18.4 cents for every gallon at the federal level, in addition to an average of 31 cents in state gas taxes. Those taxes go into the Highway Trust Fund and state budgets that are used to maintain the infrastructure. Because electric vehicles don’t use gas, their owners don’t pay these taxes. If more are going to hit U.S. roads in the years ahead as experts predict, we need to make sure those drivers pay to support the nation’s transportation system like the rest of us. In the near term, Congress will have the opportunity to address the other major issue: the electric vehicle tax credit. An effort to expand the credit (upping the vehicle cap for manufacturers eligible to receive subsidies from 200,000 to 600,000 and lowering the maximum payout from $7,500 to $7,000) died during congressional budget talks in December. Those conversations are likely to pick up again in the spring. Those who oppose the expansion of the tax credit will have a key piece of data at their disposal this time: a recent report by the Treasury Department inspector general uncovered nearly $74 million in potentially erroneous or fraudulent tax credits during a recent four-year span. Fifteen senators signed a letter last month seeking more details about “what appear to be systemic problems” with the electric vehicle tax credit program. Members of Congress will soon have an opportunity to defend the hardworking taxpayers who put them in office when debate returns to the merits of the electric vehicle federal tax credit program and whether to support its expansion. Our elected leaders should put the priorities of the majority of average Americans ahead of providing generous taxpayer subsidies to a minority of the nation’s wealthy electric vehicle owners."
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