The author argues that the federal tax credit for electric vehicle purchases is ineffective, primarily benefits the wealthy, and burdens taxpayers. They call for Congress to end the credit, citing the growing budget deficit and the unfairness to those who cannot afford EVs.
Hundreds of new Tesla electric vehicles, including Cybertrucks, stand in a storage lot in an industrial area near a rail yard in Seattle. (Scott Brauer/Zuma Press Wire/TNS) The federal tax credit for electric vehicle purchases has far outlived its purpose and now stands as a glaring example of government overreach and economic inequity.
Originally introduced in 2008 to stimulate a fledgling market, and then renewed and expanded in 2022 as part of the Inflation Reduction Act, this credit remains what it has been from the start: an ineffective subsidy primarily benefiting the wealthy. Congress should end it. On the fiscal side, we face a $2-trillion budget deficit, and it’s growing. According to the Treasury, the credits for electric vehicles in the Inflation Reduction Act, which can be up to $7,500 on certain new EVs and up to $4,000 on certain previously owned EVs, representIn addition, the EV credits are part of an industrial policy package of energy tax credits, mandates and “buy American” requirements under the IRA that will costBeyond the price tag that burdens taxpayers, the credit is unfair to the vast majority, who — being less well off than EV purchasers — drive relatively affordable gasoline-powered vehicles and do not reap any financial benefit from the credit.“For vehicles purchased in 2021, taxpayers with adjusted gross income (AGI) greater than $100,000 represented 22% of all filers and received 84% of the credit benefits.” The IRA tax credit’s income limit ($150,000 for single filers, $300,000 for joint filers) and refundability may tilt some benefits to low-income taxpayers. However, EVs have higher purchase prices than comparable gas vehicles, even with tax credits, and installing home charging equipment is easier for homeowners, who tend to have higher incomes, versus renters. As a result, EV tax credits will probably remain a higher-income taxpayer boondoggl
Electric Vehicle Tax Credit Government Spending Economic Inequality Inflation Reduction Act High-Income Taxpayers
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