gimme-five | The blog of a busy guy.

Jun/06

22

Clarifications and Solutions to the Hybrid Tax Incentive Issue

The point of the hybrid tax breaks, I think we can all agree, is to reduce American dependence on oil. For this reason the tax breaks should try to give Americans an economic incentive to purchase a more fuel efficient vehicle when they are in the market for a car.

That’s why it doesn’t make sense that we are going to limit the tax breaks for a particular manufacturer, or allow any hybrid vehicle – even ones that are hybrid without the goal of reducing fuel consumption – to receive these tax breaks. The goal of these tax breaks is not to encourage people to buy hybrids just for the sake of buying hybrids – it’s to encourage people to reduce their fuel consumption while driving.

I believe that we need to do the following:

  • Remove the caps per individual manufacturer.
  • Require that the hybrid vehicle have a certain additional miles per gallon versus the original model before it qualifies for a tax break.
  • Give tax breaks to ANY car that receives a high MPG rating
  • For larger cars – focus on hydraulic hybrid technology (this is a really exciting technology) instead of gas-electric hybrid technology.

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4 Comments for Clarifications and Solutions to the Hybrid Tax Incentive Issue

Shaniqua | June 22, 2006 at 12:18 pm

I don’t know if you were referring to this recent NYT article – maybe I missed your link; but the NYT article is quite clear on the protectionist nature of the 60,000 number.

We WILL cut off our nose to spite our face….

http://www.nytimes.com/2006/06/21/business/21leonhardt.html

Toyota hit the 60,000 mark last month, less than five months after the Jan. 1 start of the program, and the credits for its hybrid buyers will be cut in half on Oct. 1. (Because there are waiting lists for the Prius and Camry Hybrid, people who buy one in August or September may get their car after Oct. 1.) On April 1, 2007, the credits will be cut in half again. On Oct. 1, 2007, they will vanish. Honda, for its part, will probably hit the cap next year.

And the Big Three? Combined, they have sold fewer than 15,000 eligible vehicles so far, all by Ford, largely because their hybrids have not impressed buyers. Rather than building highly efficient hybrids like the Prius, Detroit has tinkered with gas guzzlers like the Chevrolet Silverado, adding hybrid technology to them so that they get slightly better mileage.

Come next year, then, the government will pay you to buy a Silverado hybrid (which gets about 16 miles per gallon) or a Ford Escape Hybrid (which gets about 26, according to Consumer Reports), but not a Prius (44) or a nonhybrid Corolla (29).

Today’s news: http://www.msnbc.msn.com/id/13474997/
Earth warmest in at least 400 years, panel finds

Author comment by george | June 22, 2006 at 12:24 pm

Whoops I totally forgot to link it. Good find. I’m going to post your second link as an article in a little bit I think.

Chris H | June 22, 2006 at 1:00 pm

Come on, George… Do you honestly think that the tax incentive for hybrids was solely created to decrease our dependence on oil?

Here’s my cynical view of the situation.

Representative A has an environmental friendly agenda, so he proposes this bill. Rep. B has a Prius factory in his district and thinks this is a good way to support his area. Rep. C has a Honda factory in her state and wants in on this action too. Now, Rep. D is backed by the GM workers union. D wants the bill nixed altogether, but makes a concession to just limit the rebate to a fixed number of customers, thinking that buyers will look at regular cars after the quota runs out.

So, A+B+C-D = a fairly good bill. Unfortunately, nothing can ever be as clean cut as we’d all like in politics. In fact, it could be worse. This bill could have been coupled with bill allowing deforestation in Alaska. Things work funny in DC.

Author comment by george | June 22, 2006 at 1:38 pm

No, I don’t. If you ask the people who created it, they’ll say the idea is to reduce oil dependence. If you look at why they created it the way they did, you’ll see that it’s motivated by who they sold out to. That’s the problem, and the exact reason I wrote this article.

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