By Liam Sigaud, opinion contributor — 11/27/18 02:00 PM EST
The views expressed by contributors are their own and not the view of The Hill
In 2008, in an effort to coax more Americans into buying “green” vehicles, the federal government instituted the electric vehicle (EV) tax credit.
By law, the EV tax credit begins to phase out – and eventually expires – once a manufacturer has sold 200,000 qualifying electric vehicles. Tesla has already reached this threshold, and General Motors is expected to cross it before the end of 2018. Understandably, these large electric vehicle makers are fighting to maintain this government handout, and some lawmakers have proposed removing the cap on the EV tax credit altogether.
Not only should Congress reject proposals to uncap the EV tax credit, lawmakers would do well to repeal it entirely.
The EV tax credit is anti-competitive and prevents the free market from operating correctly. By favoring certain vehicles through the tax code, the federal government picks winners and losers.
Thanks to the EV tax credit, car buyers can qualify for up to $7,500 in government subsidies when buying an electric vehicle. In 2016, 57,066 individual taxpayers claimed $375 million in EV tax credits. These subsidies overwhelmingly benefit the wealthy. Tesla buyers, for example, had an average household income of $293,200 in 2013. A study in 2015 found that electric Ford Focus buyers had an average household income of $199,000. By contrast, the median household income in the U.S. in 2015 was $56,516.
Overall, the top 20 percent of income earners receive about 90 percent of EV tax credits. Additionally, data from 2014 indicates that over 99 percent of total EV tax credits went to households with an adjusted gross income above $50,000.