Electric vehicles, to be sure, may be cheaper to refuel recharge than conventional vehicles, but they are still pretty expensive to acquire.
In an effort to spur interest in clean electric vehicle technology, Internal Revenue Code Section 30D (IRC 30D) is better-known to most people as “$7,500 electric vehicle tax credit.” Currently, IRC 30D provides buyers of electric vehicles a maximum of $7,500 dollars tax credit for that tax year. A maximum of 200,000 electric vehicles, per automaker, will continue to be subsidized until one year after that limit has been reached. For those interested in a Tesla Model S, for example, this shouldn’t be for a few years, yet, and likely to be a little less time for the Nissan Leaf.
All told, considering that 200,000 plug-in vehicles per automaker are covered by IC 30D, with a maximum of $7,500 rebate each, this might amount to a maximum of $15 billion. For Republicans, this is just plain wrong, which is why they’ve tried to kill IRC 30D at least a couple of times. This time, under the Tax Reform Act of 2014, Section 1308 a single line could wipe out future electric vehicle purchase subsidies – “Under the provision, the credit for new qualified plug-in drive vehicles would be repealed. The provision would be effective for vehicles acquired after 2014.”
It will be hard enough to make it through Congress but, given that it’s such a big package, and Section 1308 is essentially one line of text, it could signal the end of electric vehicle incentives. Not everyone believes that the federal government should be subsidizing electric vehicles, but I don’t believe President Barack Obama will sit idly while something like this is in the works. Proponents of Section 1308 suggest that the country will save some $5 billion by eliminating electric vehicle tax incentives. On the other hand, it appears that Republicans have no problem at all subsidizing the fossil fuel industry.
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Thanks for this excellent article! Good to put a spotlight on this provision in Chairman Camp’s Tax Reform Discussion Draft. Still, as you note, it seems very unlikely that any real Tax Reform will go through the Congress this year, especially when Senators Mitch McConnell and Harry Reid both say the plan has no chance in the Senate.