As the laws are written today... EV Tax Credits are a boon for the rich.

[WarGamer]

A couple things.

Speaking particularly about the 7,500 tax credit...

First you have to OWE 7500 in Federal Income Tax to take the credit.

Secondly, self-employment income tax doesn't count.

You know how a LOT of rich people take the 7500 credit?

They intentionally incur a big tax hit by transferring retirement $$ out of their investment vehicles "tax free" using the EV credit.



Has ANY politician given a reason WHY the $7,500 is a "Federal Income Tax Credit" and not simply a pure Credit like EITC?

Almost makes me the think the laws are written to coddle the high middle income earners and the rich... I'm wrong, right?

[Tomconroy]

1. Electric cars this far have been priced for the relatively well

to do. I know I can't spend $45000 on a new car. Isn't that what they go for?
Ford has announced they are going to go all electric. Not sure why we need subsidies.

[WarGamer]

2. 45k and up... smdh

[Scruffy1]

8. The last new car I bought cost $13,000.00.

I drove it ten years then gave it away. A couple of years ago I bought a very nice used car for about $12,000. I'm reminded of a pipe fitter we had working on a project for the company I worked for who drove a twenty year old pickup to the plant every day. We were talking one day and he told me he bought it when he was an apprentice. The way he figured it was that even with his step increases and journeyman status he was still making the same amount of money. I can't remember what the pipefitters scale was then, but today, in the same state it's over $60.00 an hour with benefits. When I retired I figured I was making the same money as I was when I was twenty if you figured in inflation. Americans spend about 25% of their income on cars. which to my thinking is crazy. What we need is better public transportation and neighborhoods that you can live in without one. Electric cars are coming, but they won't solve the problems of traffic congestion, the massive amount of space taken up by roads and parking which cause huge environmental problems, and the general pain in the ass of driving. As I often tell people, nothing good ever happened to me behind the wheel of a car.

[MichMan]

3. The price of the cars will rise $7500

[Voltaire2]

6. Not if there is competition.

[MichMan]

9. They will all do it

[Voltaire2]

13. No they won't. Not if there is competition

for customers. What they will do is compete.

[manicdem]

18. No competition

Problem is there isn't going to be much competition for EV vehicles for a while. Tesla is the largest seller of EV's by far and it'll stay like that for a while. Everyone else is just sending out token amounts of EV's and losing money on them. There isn't enough lithium and other resources to build the fleets of EV's that are needed. Tesla's foresight created manufacturing that is far more efficient than anyone else. Other legacy car makers are 5 to 10 years behind Tesla in creating EV's at the same price without losing money on them and could go bankrupt.

[Voltaire2]

20. Well that is a different claim.

Tesla probably can ignore the competition, especially in the ‘low end’, 50k Ev market.
At least for now. Probably not 10 years though. But meanwhile Ford, VW, and other big auto cos making serious moves into that market are not going to raise prices by 7500 because of the credit. They can’t because of the competition.

[Voltaire2]

4. Yes you have to have at least 7500 in

Total federal income taxes for the year you file to get the full credit. However I have no clue how self employed income gets excluded, as it certainly gets included as income on my taxes.

[WarGamer]

7. I got one word wrong... TAX not income.

In order to take advantage of the credit, you have to have ordinary tax to offset the credit against. Unfortunately you only have self-employment tax and the credit can’t offset that. If you don’t use the credit in the year you bought the car, then you lose the use of the credit. I found that in the Form 8936 instructions for line 23, “If you cannot use part of the personal portion of the credit because of the tax liability limit, the unused credit is lost. The unused personal portion of the credit cannot be carried back or forward to other tax years


So yes... SE tax is NOT reduce-able by the EV credit

But if the SE income is high enough, it can apply towards the 7500.

[Voltaire2]

12. I'm still confused.

The self employment tax is the other half of the ss/Medicare tax- the part an employer pays. Your self employment income is otherwise taxed just like ordinary wage income, and those taxes I think would certainly qualify for the credit.

[WarGamer]

15. Yes the SS.. FICA taxes can not be reduced with the EV credit.

For example, make 75k in self employment income and you'll pay 15.3% for EVERY penny of your net earnings.

So you make 75k, you pay 75k x 15.3% = $11,500 in SE taxes. This 11.5 can not be reduced with the EV credit.

And on that 75k, you might only owe $5000 in Federal Income Tax. That part is subject to the 7500 credit.

So you can pay 19,000 in taxes on 75k earnings and only get PART of the 7500 rebate.

[ymetca]

5. Whenever Congress talks "tax credits"

that pretty much means "nothing for thee".

How 'bout getting rid of that $20 billion per year in subsidies for Big Oil? Nope. Too many jobs at stake.

When 40% of the economy is driven by government contracts, it's almost impossible to extricate from it. Thus we drift from Neoliberalism to Fascism, fetishizing "job creators", rather than just creating government jobs for what we need done.

The most expensive way possible to run a government. By design.

There's plenty of tax revenue, only it's magically unable to be redistributed fairly. By design.

[PoliticAverse]

10. The BIF bill being signed tomorrow has even more subsidies for fossil fuel companies. n/t

[Baked Potato]

11. Democrats are attempting to change this in the latest plan (BBB).

Speaker Pelosi and Democrats are on it. Democrats want to give more for Union produced vehicles, which Republicans are whining about.

“Making EV tax credits ‘refundable’
Currently, the EV tax credit is a nonrefundable credit when you file your taxes, meaning it simply lowers your federal tax bill — you have to make a certain amount for it to really have an impact.

However, the latest version of the Build Back Better bill turns the EV tax credit into a refundable amount. With this change, it wouldn’t matter if an EV buyer owes the IRS or not — anyone who buys an EV will be potentially eligible for at least $4,000 in their pocket.”

https://www.marketwatch.com/story/a-made-in-america-tax-credit-what-car-buyers-considering-a-tesla-rivian-or-other-evs-need-to-know-about-build-back-better-11636581381

[Voltaire2]

14. That would be better.

However BBB has about zero chance of getting passed.

[Crepuscular]

16. ...

Making the EV credit applicable only to Union made vehicles would be a huge mistake, both in terms of giving the Repubs another issue to run on in next years mid-terms and also in stifling the number of EV's sold.

If it is a positive step towards mitigating climate change to transition to EV's, then it seems to look a might hypocritical to try and force people to only buy EV's manufactured by one of the major supporters of Democratic political campaigns. The ad's will write themselves and once again we would be shooting ourselves in the foot. Is it a climate crisis or is it just a convenient ruse to redirect more business to political supporters? That's what they will say and the average person will be unable to understand any nuance involved in this plan.

It's going to be hard enough to convince people to pony up the money for EV's, why handicap that effort by giving it the appearance of playing partisan politics with EV credits?

[Baked Potato]

17. Then Democrats can negotiate the Union made requirement.

If that’s the sticking point, we’ll see if there will be support otherwise.

[Rstrstx]

19. The made-in-USA with union labor is a $4500 credit at this point

Manchin has balked at it so it may not stay in the bill. Even without it there’s still about $8000 worth of credits for an EV and as mentioned elsewhere would apply to all buyers (though there may be an upper income limit, I know there’s a maximum price that would not let the credit apply to luxury vehicles). One interesting provision is that there is a $4000 credit for a used EV.