Let’s face it, the $7,500 federal tax credit for the Tesla Model S is hard to defend. Only the wealthy can afford a $100,000 car, and the wealthy hardly need the tax credit. This factoid opens the door to criticism against the whole project of electric vehicle adoption. I think that’s behind today’s slate.com article by Daniel Gross making dismissing electric vehicle perks as just an example of green privilege showered upon the wealthy, and asks why aren’t the tax credits also offered to gasser cars that happen to get good MPG ratings? The article reads like a hit piece on not just electric cars, but also renewable energy technologies which also receive federal tax credit support.
My answer: The US constitution grants the Government the right to levy taxes. The money is to be used “to pay the Debts and provide for the common Defence and general Welfare of the United States“. Hence, tax credits should also be used to promote the general welfare. (see Electric vehicle tax credits encourage adoption, help governments reach climate goals for more details)
If this dude, Daniel Gross, is so up in arms about “green tax credits” where was he a few years ago when people were abusing Section 179 of the US tax code to get absurd tax breaks for Hummer’s. The upsurge of Hummers was largely due to the Hummer Tax Loophole, and was never the sort of thing the Federal Government should have supported with tax dollars.
What’s named in the article are:
- Federal production tax credits for wind and solar energy farms
- Low interest loans to battery and car manufacturers
- Tax credits for plug-in electric car purchases
- Subsidies for public charging infrastructure – and the privileged status of those parking spots
- Allow solo drivers of BEV and PHEV cars access to high occupancy vehicle (HOV) lanes
Of those he spends the most space in the article on the 4th item – the privileged status of electric car charging spots, and the tremendous potential to save time because of that status.
He owns a Plug-in Prius, and commutes from Fairfield County Connecticut to a job on Manhattan Island in NYC. Like so many others in his situation, he drives to a local train station and rides the train into Manhattan. With his status as a plug-in vehicle owner, he gets to park at one of the charging stations at the train station. What’s important is the charging station location – up front, close to the actual train station, in a very privileged parking spot.
Generally speaking, there’s high competition for parking around that train station, at a cost up to $15 per day. Therefore, preferred parking close to the train station saves him gobs of money on parking fees, plus the 10-20 minutes per day that would be otherwise spent on the hassle of parking a long ways from the station.
He describes it as an “absurd and unwarranted privilege”.
However, this doesn’t cost the government (taxpayers) any money other than the very small cost for installing and maintaining a few charging stations. The location is dictated not by a desire to give EV drivers a privilege, but by the cost to install the charging stations. The cheapest cost is to install charging stations next to a building which has sufficient available power. It’s of course possible to install charging stations anywhere in a parking lot, at a cost. The cost for trenching and conduit install to carry the electric cables rises with the distance from the building power connection. That makes it prohibitively expensive to install charging stations at the far edge of a parking lot.
The location of EV charging stations is an example of a no-cost-to-taxpayers perk. Another example is the HOV lane access offered by some states, like California (where I live).
Theoretically the HOV lane is only for cars with 2 or more occupants, and is supposed to reduce traffic congestion. But, under the theory that electric cars reduce air pollution as well, EV’s and PHEV’s are given stickers allowing their drivers access to the HOV lane with only one occupant in the vehicle. In the SF Bay Area it’s gotten to the point where the majority of HOV cars are electrics. Access to the HOV lane seems to reduce commute time, making it a highly desired perk. And, it’s something that costs $0 to taxpayers.
As for the tax credits for electric vehicle purchases and renewable energy systems construction — let me reiterate that phrase about “promote the general welfare”. The clean energy technology direction is highly desirable, and faces a severe competitive disadvantage against the prevailing conventional fossil fuel paradigm.
The role of Government is to Promote the General Welfare. The Preamble to the US Constitution says it nicely – “form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity.”
Seems to me that promoting clean renewable energy technology is EXACTLY what Government should be doing. The competing paradigm, fossil fuels etc, is ugly, dirty, toxic, poisonous, and causes egregious damage to the political health of democracies around the world. We’re slowly poisoning our whole society to death, from toxic chemicals and an increasingly worsening climate situation. We, of course, want to divorce ourselves from that whole story.
Governments around the world push all kinds of tax credits. They don’t always do this under the ideal paradigm (promoting the general welfare) because obviously, sometimes, Government officials create tax breaks to benefit a few at the expense of the many. Sometimes the Government officials even get caught at this, and end up with some jail time. But, does that mean tax breaks for things which clearly serve the common good (solar power, wind power, electric cars, energy efficiency retrofits, etc) fall into this category?
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