Obama EV Credit-To-Rebate Plan Draws Opposition… From Democrats

Edward Niedermeyer
by Edward Niedermeyer

President Obama’s goal of putting one million plug-in vehicles on the road by 2015 has faced serious challenges from day one, with several studies pointing out that the goal probably isn’t achievable without more government action. But up till now, President Obama has forwarded only one actual policy change aimed at achieving his goal, namely turning an existing $7,500 federal plug-in tax credit into a rebate, redeemable at the point of purchase (an idea first forwarded by Michigan Democrat Debbie Stabenow). This plan should help drive a Cash-for-Clunker-style EV buying frenzy, as the rebate would not be dependent on the buyer’s tax burden. But Automotive News [sub] reports that Senate Finance Committee Chairman Max Baucus (D-MT)

is very concerned [about the credit-to-rebate scheme] from an effectiveness standpoint.

Baucus doesn’t make a regular habit of opposing the President, but apparently his concerns about the Obama/Stabenow credit-to-rebate plan are serious enough for him to put politics aside.

The AN report is based on information from one of the Senate Finance Committee’s lawyers, Ryan Abraham, who works with Baucus on the tax policy panel. According to Abraham, the basic problem is one of complexity, and the Finance Committee’s desire to simplify the tax code.

Abraham said a tax credit is clear-cut and provides a defined incentive for consumers to purchase EVs.

However, if dealers were to give customers a $7,500 rebate at the point of purchase, Baucus is worried that the incentive could become muddled because dealers also have the discretion to lower the price of the car, Abraham said.

Dealers might mix the rebate with a price reduction, confusing the customer as to how much of each he received, the Senate aide said.

Both the consumer and the dealer could conceivably claim a credit on their tax returns, he said. The IRS would have to address this potential complication

Though the White House hasn’t released details of its credit-to-rebate policy, the fact that it appears to use a dealer reimbursement system like Cash-For-Clunkers, the waste, complexity and confusion that occurred in that program should be instructive. And because this common-sense opposition comes from within President Obama’s own party, it’s hard to see it being rammed through. Which means the President is about to find himself out of policies to support his widely-criticized EV goal.

Join the conversation
2 of 14 comments
  • Facebook User Facebook User on Apr 23, 2011

    So is this for "EV"s"? Will I be able to get a 7500 tax credit on a roehr (EV) e-supersport/bike? How about a Zero or Brammo?

  • Kamiller42 Kamiller42 on Apr 24, 2011

    So, they agree in giving the tax payer's money away and disagree only on how to give it away. Doesn't sound like much of an opposing view point. You say toe-mato; I say toma-toe.

  • Tassos ask me if I care.
  • ToolGuy • Nice vehicle, reasonable price, good writeup. I like your ALL CAPS. 🙂"my mid-trim EX tester is saddled with dummy buttons for a function that’s not there"• If you press the Dummy button, does a narcissist show up spouting grandiose comments? Lol.
  • MaintenanceCosts These are everywhere around here. I'm not sure the extra power over a CR-V hybrid is worth the fragile interior materials and the Kia dealership experience.
  • MaintenanceCosts It's such a shame about the unusable ergonomics. I kind of like the looks of this Camaro and by all accounts it's the best-driving of the current generation of ponycars. A manual 2SS would be a really fun toy if only I could see out of it enough to drive safely.
  • ToolGuy Gut feel: It won't sell all that well as a new vehicle, but will be wildly popular in the used market 12.5 years from now.(See FJ Cruiser)