Recent article on plug in incentives

[meyersnole]

http://www.plugincars.com/federal-and-local-incentives-plug-hybrids-and-electric-cars.html

 

Ran across this today. Also read that the Obama administration wants to increase the tax credit to $10,000 in 2015 and let the dealership process it directly... Just won't apply to cars over $45,000 ruling out Tesla, Cadillac and Others like Porsche.

[shaggy314]

It, like 90% of anything our president wants, will not pass the house. He needs to come out against it and it will then fail in the senate. :doh:

[meyersnole]

Eventually the people will stop letting the games continue. Right now the politics are just a mess, and your right it seems like nothing can get through this mess... Unfortunately I fear it's not limited to the current president, I think it's just broken.

[Hybridbear]

I think that letting the tax incentive come off the purchase price at the dealership would be a big boost to sales. Excluding cars over $45k wouldn't be a bad idea either because the people buying Teslas of the Porsche PHEV don't need a tax break.

[TX NRG]

Excluding cars over $45k wouldn't be a bad idea either because the people buying Teslas of the Porsche PHEV don't need a tax break.

Curious. Why do you suggest discriminating and not offer it to all people?

[Doug0716]

Curious. Why do you suggest discriminating and not offer it to all people?

 

I imagine this is more of an incentive for manufacturers to keep their prices reasonable rather than mark it up $7500 because they know the customer will get $10K back.

[Hybridbear]

Curious. Why do you suggest discriminating and not offer it to all people?

Because ppl who can afford a $80k car don't need a tax break. The poor working class people who are driving an old beater and spending hundreds of dollars per month on gas are the ones who would most benefit financially by receiving a tax credit which allows them to replace a gas guzzler with an EV. Since having an EV would put money in their pocket which was previously spent on gas they would then spend that money in their local economy, fuelling growth. Or better yet, they might be able to put that money into savings to be able to send their kids to college or other pursuits which are long-lasting benefits. Rich people who switch from driving a gas guzzling Audi to a Tesla Model S aren't going to take their savings on gas money and provide a benefit to the local economy like lower income workers would.

 

I do not believe in the theory of trickle down economics.

Edited September 14, 2014 at 01:31 PM by Hybridbear

[meyersnole]

Curious. Why do you suggest discriminating and not offer it to all people?

 

The current tax system is full is these types of "discriminations".  Especially for those that have to deal with alternative minimum tax. An example of this was the loss of the tax incentive for the L2 charger last year.

[jeff_h]

Because ppl who can afford a $80k car don't need a tax break. The poor working class people who are driving an old beater and spending hundreds of dollars per month on gas are the ones who would most benefit financially by receiving a tax credit which allows them to replace a gas guzzler with an EV. Since having an EV would put money in their pocket which was previously spent on gas they would then spend that money in their local economy, fuelling growth. Or better yet, they might be able to put that money into savings to be able to send their kids to college or other pursuits which are long-lasting benefits. Rich people who switch from driving a gas guzzling Audi to a Tesla Model S aren't going to take their savings on gas money and provide a benefit to the local economy like lower income workers would.

 

It depends on what the objective is: to try and make EVs more affordable for those with more modest incomes, or to get more EVs on the road without any discriminators involved. Putting a cap on one's income is a discriminator that could make the difference for someone above the income cap buy one or not, maybe not many but it probably would tip the scales for a few.

 

As meyersnole noted above, the AMT already acted as a cap for some for the EVSE credit last year - so would further income caps on purchase credits be redundant or dissuade some from buying?  Again, what is he objective - to get more EVs on the road or to get more EVs in a given income group?

[larryh]

The purpose of the PHEV tax credit is to promote PHEV's.  It is Tesla that benefits from the tax credit--they sell more cars.  You want to encourage new technologies.  If you are worried about the fairness of the tax system, there are alternative ways to address that.  You could raise income tax by an equal amount for the wealthy to provide them further incentive to use the PHEV tax credit to buy a PHEV.  You want to provide the credit to everyone to promote EVs. 

Edited September 14, 2014 at 05:00 PM by larryh

[meyersnole]

The purpose of the PHEV tax credit is to promote PHEV's.  It is Tesla that benefits from the tax credit--they sell more cars.  You want to encourage new technologies.  If you are worried about the fairness of the tax system, there are alternative ways to address that.  You could raise income tax by an equal amount for the wealthy to provide them further incentive to use the PHEV tax credit to buy a PHEV.  You want to provide the credit to everyone to promote EVs. 

 

Looking at this article Congress Fails To Renew Important Electric Vehicle Tax Credits it appears that the Tesla credit is just fine. If raised to $10,000 as proposed then I would assume that the additional benefit would not apply to cars over $45,000. Really hard to comment on legislation that  to my knowledge is not even being discussed. Congress is on vacation (again!)

[Rexracer]

Curious. Why do you suggest discriminating and not offer it to all people?

 

 

It depends on what the objective is: to try and make EVs more affordable for those with more modest incomes, or to get more EVs on the road without any discriminators involved. Putting a cap on one's income is a discriminator that could make the difference for someone above the income cap buy one or not, maybe not many but it probably would tip the scales for a few.

 

As meyersnole noted above, the AMT already acted as a cap for some for the EVSE credit last year - so would further income caps on purchase credits be redundant or dissuade some from buying?  Again, what is he objective - to get more EVs on the road or to get more EVs in a given income group?

 

I believe the purpose of the tax credit is to get more EV's on the road. People buying a Tesla or other $45k plus EV, are not going to be swayed by the credit either way. So using the funds to support/promote those purchases only limits the funds available for other EV purchase's. A $10k credit to those looking to buy a Corolla or a Focus Electric could very well be a deciding factor. The person looking to buy a Tesla S or a Mercedes S-class, he/she is just going to buy what they like better.

Tesla expects to sell 35k cars this year x 10k = $35 million in tax credit.

http://www.bloomberg.com/news/2014-07-31/tesla-model-s-sales-matched-estimates-on-china-shipments.html

 

Money doesn't grown on trees,that money could be used for sway other EV drivers, or at minimum the price tag for the entire project would look $35 million cheaper, thus having a higher probability of being approved.

Edited September 16, 2014 at 04:35 PM by Rexracer

[Russael]

How about making the tax credit benefit those with lower income instead?  For instance, I can't claim the 7500 tax credit for a Focus Electric - a deciding factor in swaying me away from it.  But the Fusion Energi is very close to the same MSRP.  Basically, the tax credit benefits people who make more money.

[larryh]

They should allow you to use the remaining credit in succeeding tax years.  The tax credit benefits the manufacturer of the vehicle.  They would have to lower the price if there were no tax credit to sell the same amount of cars. 

[Hybridbear]

How about making the tax credit benefit those with lower income instead?  For instance, I can't claim the 7500 tax credit for a Focus Electric - a deciding factor in swaying me away from it.  But the Fusion Energi is very close to the same MSRP.  Basically, the tax credit benefits people who make more money.

I agree! That is my other wish. I wish that they would allow the credit to carry over from year to year. The people I mentioned above would not be able to benefit from the full credit when buying a car, only if they lease it unless that rule is changed.

[Kybuck]

First off, I realize there are always exceptions to every assumption/generalization.  And I'm sure someone will be sure to point them out.

 

The Energi models have a ~$4k tax credit.  Assuming a ~15% base tax rate, an individual/family would need roughly $27k in income for the year to have paid $4k in taxes.

 

The C-Max Energi (least expensive of the Energi models) starts at approximately $31,600, or $27,600 after the $4k rebate.  An individual/family that has less than $27k in income should not be purchasing a car that costs more than their yearly income.  Again, I realize there are sometimes exceptions and this is a bit of a generalization.  Even assuming other deductions/credits, bumping the income up to $35k/year doesn't change the recommendation.

 

The Focus Electric has a $7500 tax credit.  Using the same base tax rate assumption, an individual/family would need roughly $50k in income for the year to have paid $7.5k in taxes (and using a higher tax rate leads to an even lower income).  At a $35k base price ($27.5k after tax incentive), we're still talking >50% of the yearly income.  Is the difference between a $27.5k Focus electric and a $17k base Focus going to ever really pay out in gas savings?  Even assuming free electricity, that would require filling up approximately every other week for 10 years.  And the difference is even worse if you consider the alternative of buying a used car (even just a year or two old) - quick searches show ~$13k for a 2013 base Focus - half the price of a new Focus Electric even after the tax credit.

 

The choice isn't as black and white as "old gas guzzler or clean new EV".  There are a multitude of options in between, and people need to look at all of those options and find the one that makes the most sense given their personal financial situation.  In many cases, assuming they have an old gas guzzler, a lightly used fuel efficient vehicle could provide a significant benefit at the fraction of the cost of a brand new EV. 

[JATR4]

First off, I realize there are always exceptions to every assumption/generalization.  And I'm sure someone will be sure to point them out.

 

The Energi models have a ~$4k tax credit.  Assuming a ~15% base tax rate, an individual/family would need roughly $27k in income for the year to have paid $4k in taxes...

 

Not enough income.  Adjusted gross income of $30,000 generates a 2014 tax liability of $2,524 for a single person with one exemption.  You might lose as much as $1,483 if your income is that low (4007 - 2524).

 

A single person with only one exemption using the standard deduction would owe $4,025 based on adjusted gross income of $40,000.  To get the entire credit you need $40K in income--more if married, etc.

 

Certainly something to consider BEFORE purchasing the car.

[Rexracer]

First off, I realize there are always exceptions to every assumption/generalization.  And I'm sure someone will be sure to point them out.

 

The Energi models have a ~$4k tax credit.  Assuming a ~15% base tax rate, an individual/family would need roughly $27k in income for the year to have paid $4k in taxes.

 

The C-Max Energi (least expensive of the Energi models) starts at approximately $31,600, or $27,600 after the $4k rebate.  An individual/family that has less than $27k in income should not be purchasing a car that costs more than their yearly income.  Again, I realize there are sometimes exceptions and this is a bit of a generalization.  Even assuming other deductions/credits, bumping the income up to $35k/year doesn't change the recommendation.

 

The Focus Electric has a $7500 tax credit.  Using the same base tax rate assumption, an individual/family would need roughly $50k in income for the year to have paid $7.5k in taxes (and using a higher tax rate leads to an even lower income).  At a $35k base price ($27.5k after tax incentive), we're still talking >50% of the yearly income.  Is the difference between a $27.5k Focus electric and a $17k base Focus going to ever really pay out in gas savings?  Even assuming free electricity, that would require filling up approximately every other week for 10 years.  And the difference is even worse if you consider the alternative of buying a used car (even just a year or two old) - quick searches show ~$13k for a 2013 base Focus - half the price of a new Focus Electric even after the tax credit.

 

The choice isn't as black and white as "old gas guzzler or clean new EV".  There are a multitude of options in between, and people need to look at all of those options and find the one that makes the most sense given their personal financial situation.  In many cases, assuming they have an old gas guzzler, a lightly used fuel efficient vehicle could provide a significant benefit at the fraction of the cost of a brand new EV. 

 

This is the sort of thinking that has had me wondering why people are worried about being able to claim the full tax credit. As JATR4 pointed out, its not as low as your numbers, especially if you figure most people are married and I would guess a large portion of FFE owners own houses (mortgage interest deduction), etc.

 

But still, your income would have to be fairly low to have a not have 4k in tax liability.

 

If I was a single person making 40-50k a year, there is no way I would be able to afford this car, or even if I could, I shouldn't as there are much more important things to be saving up for.

 

But I am sure this is all my very narrow view, using my life experience as my reference point. I really don't mean to offend anyone, I just don't understand.

[Kybuck]

This is the sort of thinking that has had me wondering why people are worried about being able to claim the full tax credit. As JATR4 pointed out, its not as low as your numbers, especially if you figure most people are married and I would guess a large portion of FFE owners own houses (mortgage interest deduction), etc.

 

I had a feeling my numbers may have been a little low.  Regardless - if married, it's worth keeping in mind that most married couples have (at least) two cars, so having a combined income that's twice a single person's doesn't mean that you can automatically spend twice as much on a car - you can spend twice as much on the cars combined, which averages out to the same as a single person.  The mortgage interest deduction helps, but the fact there is a mortgage payment likely means higher monthly expenses/payments.  If there isn't a mortgage, then a plug in car may or may not work, since most apartment facilities don't have car charging infrastructure (nor do many rental houses, etc.).

 

I'm in the same boat as you - per my life experiences and my personal preferences, the numbers don't add up.  But as I mentioned in my first reply, I know there are likely exceptions that don't immediately come to mind.

[HotLap]

I get so annoyed when I read about further tax bracket discrimination...anyone who says the "wealthy" don't deserve the same tax breaks that everyone else gets is not looking at the entire equation.  Our income tax is PROGRESSIVE and throw in the Alt min tax and you have a successful person paying way more than their share of taxes!   I am single, have worked very hard and taken significant risks to be successful and I pay much more in taxes than the average American does...so now I need to be "villanized" and don't deserve tax credits!  Before anyone criticized those who make an above average income, you might want to consider how much more they are already paying in absolute dollars...and really the incentive for EV's should be aimed at reducing carbon emissions and saving this planet we live on - not just at a particular class of Americans...

[Mikesan]

I agree.  The purpose of incentinves ought to be to get as many of these cars on the road as possible, not more government-driven wealth redistribution.  While I am taking advantage of these incentives, I think they should be eliminated.  The technology ought to justify the price without gov't influences.  I also believe that government provided incentives allow manufacturers to keep their prices higher than they would be without them.