Tuesday, February 15, 2011

Tax Breaks for Electric Cars? (Update 2)

Updates below (Thanks Mike at Confederate Yankee [CY]):

Update 2: Link to FOX News story about the federal government subsidizing the electric car market by giving money to cities to put up charging stations.  No one ever offered to purchase tires that get better gas mileage, or to get me a tune up. As usual, FOX News makes points that the other networks won’t like the cost to us taxpayers.

The other day Seattle PI blogger Robert Brown asked the following question:

16 people responded to his question, and a little less than half thought we should NOT tax electric cars. A couple of the responses were of the “nanny state take care of me” variety.

One commenter called Orcas Island said:

“I think we should raise the gas tax on combustion engines then use those funds to reward those who purchase either high-mileage hybrids or electric transportation.

Your Fred Flintstone, gas-combustion Klown Kar is no longer a status symbol. Get over it already.”

Mr. or Mrs. Island is a little short-sighted, in my opinion.  When I first read the question at the top of the article, I was just going to give a quick short response, but “Island” got my dander up a tad.  My response actually turned out to be quite lengthy.

“Why is this even a question? The gas tax is pay for the roads and unless these new-fangled electric cars float over the roadways, they have to pay taxes also.  Let’s just argue for a minute that electric cars pay no taxes. At some point down the road, electric cars will no longer be an oddity. When this point is reached, and electric cars are not taxed, how are taxes going to be collected for road repairs? Don’t say increase taxes on gas cars because the last people to make the transition to electric, given the current and projected costs of the cars, will be the people who can least afford to have punishing taxes just so more well-to-do folks can drive around in a little car that hums.”

The first point I was trying to make are the gas tax is a necessary evil if we want to have good roads. I don’t like the added expense of gas due to the taxes. Here in Washington, our taxes have gone up each year since I arrived in 2004. It’s only been a penny here and two pennies there, but after a while and enough fill-ups, it starts to get a little pricey. If the electric car buyers get their way and don’t have to pay the gas tax how is the difference going to be made up as more electric cars hit the roads? Fewer gas fueled cars means either lower tax revenue or higher taxes on those still driving the combustion engine.

Where I have a problem with the higher gas tax is how will the tax burden be distributed? It will be a regressive tax. The last people who will be able to make the switch to electric cars will be in the lower portion of the economic spectrum or have larger families which won’t fit into an electric car (as currently designed).  The same type of people who are wanting to have the switch to electric cars subsidized or tax free are most likely the same folks who desire to see “the rich” pay more taxes. That isn’t how this will work. People who are “better off” will get these cars and the burden will slide to the poorer and families. That sure doesn’t sound fair to me.

BTW: before you throw me under the bus for generalizing about people who want electric cars as well as higher taxes on the rich, I want you to prove me different. Show me someone who is clamoring for no taxes on electric cars who also thinks the rich pay too much n taxes now.  If you find that one person, I won’t retract my statement I will apologize to that one person for lumping him/her with everyone else.

Another commenter called spaceagepolymer said:

“Taxes are used to earn revenue, but they are also used to incentivize behavior and action. Married couples and people with children get tax breaks because someone, somewhere thought that supporting that behavior and choice was important.  Lots of us think the same about electric-powered vehicles.  Creating a demand for them and the infrastructure they require through tax incentives makes sense. In time these incentives won’t be needed and we can end them.”

We have had incentives in the past and they have been utter failures. Cash for Clunkers was not the godsend to the auto manufactures it was supposed to be. Sales did see an upturn, a significant one, then fell off the cliff when the program was over. There were even unintended consequences. The cost for a used car shot up over $1,800.00. This increase makes it tough for lower incomes families to purchase that second car or for the teenager to buy his/her first car. The final Cash for Clunkers indignity was the $24,000.00 cost per vehicle the American taxpayer had to pick up.

The winterizing program, funded with money from the “stimulus program” has been an abject failure. Cost overruns, shoddy workmanship, and fraud. Very few jobs have been created by this program, certainly not at the level promised by the administration.

Why do you need a tax break to buy a car? Why do I need to subsidize the purchase of your new car just so you can feel good about yourself? If you want to buy a new electric car and save the environment, please feel free to do so; just don’t ask me to help you out. Your car, your choice, your purchase, your responsibility.


Mike over at Confederate Yankee sent me a note containing some further information on electric vehicle, the Chevy Volt in particular.  He does a great job dissecting a review of the Volt done by NY Times writer Lawrence Ulrich.

As Chevy reminds us incessantly, Mr. Ulrich writes, a Volt owner can travel 40 miles each day and never burn a drop, joule or calorie of gasoline (more, obviously, if you can plug in while at the office or shopping mall).

My problem with this is who is going to pay for the charging of the vehicle? Here in Washington State there is a project called West Coast Green Highway which calls for a series of charging stations along the I-5 Corridor from Vancouver to Vancouver. At these stations, folks charging their vehicles will be charged the “going rate” for electricity. I assume this will be done either by using a debit/credit card or somehow to the user’s electric bill. BUT, other than this project, I have not yet found out about charging stations that will charge the consumer. The few stories I have read indicate the stations are used free of charge. I really hope these folks driving these vehicles don’t expect the rest of us to continue to pick up the cost. They are already getting huge $7,500.00 tax break from the feds and state government incentives. Do they really need any more breaks?

I recommend that you stop by CY and give these a read.

I will highlight a few things that I found interesting.

One of the first things that I noticed about the Volt was its price tag, $41K (before the tax break). Mike noticed it too.

Buy a Chevy Cruze for $20,000 and save thousands. Yes, that’s from $13,500 to $15,500 (there’s that 240V fast charger again). I suspect most folks see “thousands” as two of three (That’s my take too PACNW Righty adds), not 13.5 to 15.5. Even if a Volt saved $1000 a year in fuel costs over a comparable high-mileage sedan, it would take 13.5 to 15.5 years to break even in those costs alone. If, for example, an economy minded buyer purchased a Ford Fiesta for say, $18,000, the numbers become even worse: From 15.5 to 17.5 years to break even. Most people would never come close to breaking even. This is what economists call a “disincentive”

Even with the tax break, the cost puts the vehicle out of range for a lot of folks. Don’t get me wrong, I’d pay $35K for a F150 4x4, Extended Cab, because this vehicle has utility. I can haul around my family of five, one who is 6’-4”, comfortably. The Volt seats four and two aren’t terribly comfortable. I can stick a whole bunch of crap in the back and haul off the dump or recycling center. If we want to go camping, throw all the stuff in the bed, hook up the trailer, and off we go. The Volt looks like I might be able to stick a medium sized suitcase in the boot. Forget a trailer.  And how about that distance? If I want to load up the family and drive to visit the parents in PDX, I’d have to stop a minimum of three times to recharge if I wanted the best economy. At a fast charging station, that would tack on at least two hours to what is now a three hour 2.5 hour trip. Plus, now I have to plug it in once I get to pa’s place and he gets to pay for my recharge. Actually, that sounds like a great idea; let someone else pick up the tab (sarc off). Bottom line? This vehicle is just not practical for the average person who actually has a life outside of hugging trees and burning incense to ma earth.

In Mike’s first article on the new Chevy Volt, he brings up several very interesting points on how this whole Volt-thingy is going to have problems out of the gate and down the road. You have got to read his customer and salesman scenario, it is a hoot.  I touch on the same subject below in my original post:

America is just about tapped out on electric capacity, capacity flowing through a crumbling electric generating and transmission infrastructure, an infrastructure that cannot be replaced or augmented. Why not? Because Mr. Obama and all of his allies oppose the building of new power plants, nuclear, coal, even solar and wind. No, I am not kidding. The enviros are opposing the building of a solar generation facility in the Mojave Desert. Yes. The Mojave Desert. Something about lizards or toads I think.  In addition, the Sierra Club and various other animal rights organizations are preventing the construction of electric generating windmills across the land because their blades kill birds and bats.  Electric facilities and transmission towers despoil pristine – and not so pristine – wilderness, etc.  And there are various politicians keeping windmills from despoiling their favorite views of nature.  You name it, someone on the left opposes it and has it tied up in litigation and red tape.  Add EPA Chief Carol Browner altering scientific documents and lying about it to make it appear that scientist supported a drilling ban in the Gulf of Mexico, combine that with Administration refusal to authorize the building of additional refinery capacity, and the Obama Administration has succeeded in creating a lose/lose situation. (PACNW added the links)

In addition to the windmill projects, the Sierra Club is proudly boasting on their website that through their efforts, 150 coal-fired plants have been shut down. So, they oppose wind generation, and coal generation. What the He!! do they want? Us back to the stone-age?

Another note: the Mojave Desert solar project would generate electricity for approx 142,000 homes and would cover up 6 square miles of the desert floor. That would nearly cover the Budd Inlet from Olympia to the Puget Sound.

As I polish off this post tonight (this morning?) and rereading everything, some might get the impression that I am anti-environment. Nothing could be further from the truth. I'm just not a nut-job about it. There is no way that I could live in a place as beautiful as the Pacific Northwest and be anti-environment. I tend to think of myself as middle of the road. Those on the far left side of the environmental debate would probably beg to differ with me, but that is OK. If they can keep their head about them, we can discuss and debate.

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