Congressional Budget Office: EV Tax Credits Promote Gas Guzzlers

Bertel Schmitt
by Bertel Schmitt

Washington’s campaign to put you in an EV will cost the taxpayer $7.5 billion through 2019, and it’s all for nothing, says a report by the Congressional Budget Office.

The policies will have “little to no impact” on overall national gasoline consumption the report, cited by Reuters, says.

Those up to $7,500 tax credits will account for only 25 percent of the $7.5 billion bill, says the CBO.

$2.4 billion are grants to battery makers and projects to promote electric vehicles, $3.1 billion are loans to auto companies.

The CBO is putting its finger on an even nastier aspect: The tax credits indirectly, but very efficiently promote the sale of gas guzzlers. Through off-sets, carmakers that sell government-subsidized EVs can now sell more gas hogs.

“The more electric and other high-fuel-economy vehicles that are sold because of the tax credits, the more low-fuel-economy vehicles that automakers can sell and still meet the standards,” says the report.

What little gasoline is saved through EVs comes at a very high price. The U.S. government will spend anywhere from $3 to $7 for each gallon of gasoline saved by consumers driving electric vehicles.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • CJinSD CJinSD on Sep 21, 2012

    Free markets would address all of these issues, real and imagined, without the need for real or imagined resource-driven wars, for corrupt politicians, for a brainwashed populace. International oil supply unstable? Domestic resources become more valuable and better utilized. Mass transit costs require perpetual subsidies? Then no more resources will be wasted, be they real estate, right of way, energy, non-productive labor, materials, etc... One energy source becomes too scarce? Then the market motivates new or improved alternatives. You don't have to bribe people to enrich themselves, only to act irrationally. Stupid is as stupid does.

    • See 3 previous
    • 01 ZX3 01 ZX3 on Sep 22, 2012

      I like the way you think.

  • Dan Dan on Sep 21, 2012

    Addressing gallons in terms of miles didn't work 35 years ago and it doesn't work today. Conservation by the mile is like dieting by the size and number of forks per place setting at a buffet. That's ok, though. Some day our federal brontosaurus will notice that it did in fact step on a thorn. And it will blink, bellow, and indiscriminately trample a different piece of the market instead.

  • Landcrusher Landcrusher on Sep 22, 2012

    Ajla, It goes back to late 19th century, and you are close to my point. Where is the data that fuel taxes are regressive? Why would you count those on a dole as victims of its regression? Where is the evidence CAFE saves fuel, and aren't sales taxes on new cars incentivizing buyers not to upgrade or buy a second car for one passenger trips? And yes, shouldn't the progressivity (word?) of income and property taxes be enough? Finally, knee jerk reactions to any consumption tax, no matter how fair, is just as bad as Norquist.

  • Blowfish Blowfish on Sep 23, 2012

    not sure how the tax system work in south of 49th parallel, being north of 49th //. the lower income folks usually are not self employed, therefore they dont enjoy as much of a tax write off as the self employed folks. by and large banks are not usually crazy to lend u money to start your own company / biz as to becoming self employed. being SE u get to write off your dog's feed, gas for your guzzler, meals receipt for family could advertently endup in business entertainment, this list can go on & on. Wage earners usually have source deduction, where your taxes, employment insurance & canada pension were deducted from the company u work for and submitted on your behalf. SE u do tax return yearly in end of april by your trusted & creative accountant, he'll reshuffle all your receipts, should your co. makes a ton of mulla he may suggest u to incorporate so u leave some money in the inc and pay income tax at a lower rate. only take enuf money as needed, the rest re-invest in the highest yielding T bills, bonds etc. the bottom line is the more money u have the less it costs u to live. Regressive perhaps an understatement. in canada the interest we pay for home mortgage loans are not income tax deducted, then when u sell the principal home there is no tax. in USA your home mort interests is tax deductable as I was told. correct me if wong.

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