Comment by mtillman
Comment by mtillman a day ago
Fine print: The truck in the link is only $20K after government subsidies/rebates. So if the government gives my tax dollars to buyers of this truck, then it will cost $20K.
Comment by mtillman a day ago
Fine print: The truck in the link is only $20K after government subsidies/rebates. So if the government gives my tax dollars to buyers of this truck, then it will cost $20K.
That's not really true.
If the taxes someone would otherwise pay are going to their electric vehicle instead, somebody else has to make up the difference.
So yes, other people are getting my tax dollars to buy electric vehicles. It just takes two steps rather than one, if you want to look at it that way.
Is the standard deduction giving people your tax dollars? Anyone who itemizes?
What if someone declines a promotion and thus doesn't increase their income and pay more taxes? Is that also taking your tax dollars?
Sure, yes, if the government doesn't follow PAYGO[1] (which they almost never do) and offset tax expenditures (tax incentives) with reduced direct spending and government debt increases then maybe, some day, some portion of your tax dollars may get indirectly spent on this.
But how do we really know? Do we know what other secondary effects will come from these tax incentives?
If electric cars catch on maybe the government will get more revenue somewhere else (there are North American manufacturing requirements to qualify after all) or have to spend less revenue on something else (surely burning oil must have some effect).
Or maybe the person getting the electric vehicle then uses it to make more money and pay more taxes than they would have before (unlikely but possible).
But, directly, they're getting back their own money. The real issue with the credit is that it disproportionately favors people who already make a lot of money (but taxes also disproportionately tax people who make more money so maybe that's fair).
> But, directly, they're getting back their own money.
It doesn't matter. Everyone else is now paying for all the federal government services they consume. Other people are paying for that. It's literally that simple.
Congress doesn't retroactively raise tax rates to make up the difference. If the government budget ends up in a deficit, which obviously it does, not just because of this but for many reasons, that is financed via debt. This isn't passed to the population as higher taxes, but as inflation, which affects everyone equally, including whoever got the tax credits in the first place.
First of all, you're wrong about how debt is financed. It's not via inflation, it's by taxes. Interest payments accounted for 13% of the federal budget last year. That's enormous. (Yes inflation reduces the value of debt over time, but debt carries interest which generally outweighs expected inflation.)
Second, Congress absolutely adjusts tax rates as well. Not precisely one-to-one to match spending each year, but over the long term it's all got to add up. Every dollar the government spends today is paid with people's taxes either today or their taxes tomorrow.
Third, the person who received the tax credits isn't being affected "equally". If 1% of people get the credit, but 100% of people pay for it, then the people who receive the credit end up hugely ahead in the end, while the other 99% lose out. So yes, for the 1% of people getting an electric vehicle tax credit, it is almost entirely paid for by the other 99% of people.
Goverment debt is reduced by increased taxes and/or reduction in services just as much as it is by "inflation". Further, inflation doesn't affect the person who got a $7,500 individual tax reduction as much as someone who didn't.
So, should I wish to purchase a vehicle this tax year, I tell my HR to adjust my income withholding such that I owe 7,500$ come tax time and then reap the rewards?
Or is there more to the incentive structure?
Withholding isn't relevant here. Non refundable means it can't cause the government to net pay you money: that is to say, it can't make your refund larger than your withholding.
Adjust my withholding to generate a debt to Th enticement that I claim the rebate on? I think you’re thinking the other direction.
I’m confused here, wouldn’t me underpaying on my income generate a liability that I can then claim this rebate on?
>Which means no one is getting your tax dollars to buy vehicles
Then who is making up the difference between the tax that would have been paid, and the credit reduction?
Even finer print: the $7,500 federal incentive is a tax rebate. If you don't have a $7,500 tax liability, you won't get the full amount. (this also applies if you transfer the credit to the dealer at point of sale). I mean, money is fungible and all, but your particular tax dollars aren't going to people who buy EVs, they are just paying less in taxes.
>this also applies if you transfer the credit to the dealer at point of sale
No, it does not. See Q4 at the following link:
https://www.irs.gov/newsroom/topic-h-frequently-asked-questi...
>money is fungible
And then you contradicted yourself 2 phrases over.
As opposed to other prices that are not the product of a political economy?
It's ~28k without them, particularly when considering recent inflation it's an attractive price... inflation corrected it's in the vague ballpark of other small IC trucks when they were still available.
E.g. a early 2000's Nissan frontier base model was $23k in today's money. It was a somewhat better speced (e.g. more hauling capacity) and much better range, but this new car likely has significantly lower operating costs that would easily justify a 5k uplift.
So I think it ought to be perfectly viable without the subsidy, especially so long as the absurd CAFE standards continue to exist giving EV's a monopoly on this truck size.
Electric vehicle tax credits are non-refundable tax credits meaning you can't get a credit for more than you owe. [1][2]
Which means no one is getting your tax dollars to buy vehicles (though there may be some infrastructure or manufacturing grants for companies).
[1] https://www.congress.gov/crs-product/IF12600
[2] https://www.irs.gov/newsroom/tax-credits-for-individuals-wha...