At the conclusion of 2018 — perhaps resulting from the ongoing government shutdown — Congress managed to do the unthinkable: they actually allowed a bad government program to expire. Of course, in Washington bad ideas never die (they just hibernate), so in preparation for when Congress reconvenes, here is why the electric vehicle tax credit is a zombie that should stay dead.
The now-expired electric vehicle tax credit awarded “a $7,500 tax credit for [electric vehicle] purchasers, along with zero emission vehicle (or ZEV) credits for manufacturers.” On the consumer level, the benefits of this spending program were almost exclusively awarded to the rich. The Pacific Research Institute found that “more than half of the electric car buyers claiming the credit make more than $200,000 per year and nearly 80 percent make more than $100,000. Just 1 percent make $50,000 or less.”
On the manufacturer level, the electric vehicle tax credit made Elon Musk and Tesla Motors “one of the most prodigious harvesters of government favors and handouts… And Tesla isn’t shy about their dependence on your tax dollars to stay afloat, in its 2014 annual report Tesla stated ‘our growth depends in part on the availability and amounts of government subsidies and economic incentives.'”
Even the liberal Representative Alexandria Ocasio-Cortez (D-N.Y.) has slammed Tesla for bilking taxpayer handouts, stating, “For far too long, we gave money to Tesla, we gave money to a ton of people and we got no return on our investment.”
The expiration of the electric vehicle tax credit amounts to a major fulfillment of President Trump’s promise during inauguration that “the forgotten men and women of our country will be forgotten no longer.” After all, why should the middle class have to subsidize wealthy Tesla buyers in California?
But even though the electric vehicle tax credit amounts to corporate welfare at its worst and a spending program for the rich, the safe assumption is that many will mount a full court press to reinstate this program when Congress returns to business-as-usual. Proponents will likely attempt to attach a revival of the electric vehicle tax credit to a bill extending other tax credits, so the Trump administration should be encouraged to hold firm on its previous commitment to ensuring that this spending program expires.
Taxpayers shouldn’t have to subsidize welfare kings like Elon Musk. Let’s turn the lights out on this tax credit.
Author’s note: Pat Hall also contributed to this article.