21
Hybrid Tax Credit Caps Don’t Make Sense
5 Comments | Posted by George in Environment, Money, Politics
The US government gives tax credits to those who purchase hybrids to reduce fuel consumption. However, the way these tax credits are implemented is somewhat stupid. First, big SUVs and performance cars that don’t really gain much fuel economy from being hybrids (and get dismal fuel economy) still get tax credits, which I have discussed previously. Secondly, there is a 60,000 car per manufacturer cap before a clock starts ticking and the tax credits are slowly wiped out.
Why does this cap exist? When in doubt – follow the money trail. The hybrid market was dominated, and continues to be dominated, by Honda and Toyota. American automakers, who happen to lobby a lot, did not spend any R&D time developing hybrid or fuel efficient vehicles. I wonder whether or not the cap was implemented because it helps the nation reduce fuel use (how?) OR because the American automaker lobby bought out congress?
What should be done? The cap should be placed when the market is saturated with hybrid vehicles – not when one manufacturer sells enough of them. Why should a hybrid made by general motors that gets 20 miles per gallon get a tax credit in 2007 when a Prius receives nothing because it’s been two years since Toyota sold 60,000 hybrids? The best hybrids should be on the road – not an equal distribution of hybrids from every manufacturer.
5 Comments for Hybrid Tax Credit Caps Don’t Make Sense
Ben I | June 22, 2006 at 12:34 am
Author comment by george | June 22, 2006 at 8:36 am
If the market is saturated, then why should there be any tax breaks anyways? If anything there should be a tax on those cars for the creation of disposal plants for the hybrid batteries.
That\’s exactly what I said – once the market is saturated caps will be placed to limit tax breaks.
You often cite General Motors as being the most inefficient automaker, or at least you imply that… dodge, etc….
Blah blah blah…
Your last sentence is very conservative in nature. You are only favoring those who are among the highest and best in a group, in this case cars. Much like tax breaks for the wealthy. Like all things, developing technologies for new applications is long and extensive. The Prius was easier for Toyota because is only has to do one thing, drive from A to B. The Silverado pickup and Sierra pickup do a multitude of things like towing, hauling heavy loads, and actually working hard, something the Prius cannot do, and lest us not forget going from A to B.
I have no idea what you\’re getting at here.
And if you’re all for high mpg and reducing our consumption, why would you want to get rid of the only hybrid pickup out there?
I never said I wanted to get rid of the only hybrid pickup. I said I didn\’t think they should make tax credit caps on a per-manufacturer basis.
If anything, producers who make large vehicle hybrids SHOULD get the tax break and those who only make cars not get any since we already have high mpg cars that are far cheaper than a Prius and get good mileage so they don’t necessarily need any mpg improvement…now.
I have already stated in my previous article that I linked to from this one that I think cars should get tax breaks based on MPG status rather than hybrid status. But, if we have to have a hybrid tax credit, we might as well give it to the hybrids that actually show significant increases in fuel economy, instead of rewarding people for buying something that has a hybrid sticker on it but it\’s only hybrid in that the electric engine increases performance (a la Honda Accord). A hybrid that gets 2mpg more than a non-hybrid version is a waste – it should not receive a tax break.
Society will never let their full size SUVs and pickups go George. People bought even more Tahoes after Katrina then ever before for a GM first quarter.
I hope they don\’t. I would just like people who need them (ie actually use them for their purpose) to buy them and people who don\’t (commuters, people who have image issues and think they have to buy a big car), won\’t. If only there were a way to provide a disincentive to people who drove SUVs without need.
Why not push mileage up in all segments, not just one?
That would be great, but gas-electric hybrid technology is not the way to go for bigger vehicles. Hydraulic hybrid technology is supposed to work a lot better (UPS just rolled out a lot of hydraulic hybrids).
Another thing, I accept your “energy policy” of needing to get 40+ mpg per vehicle. But, you cannot force your beliefs on others.
News flash: I have a website where I write my opinion on various issues. It\’s called gimme-five. I\’m not forcing it on anyone.
Also, Honda only has one car that gets over 40 mpg, the Civic and should not be compared to other auto marques as they do NOT have a full line of vehicles, no full size SUVs, no true pickups, no high performance cars, not a one.
Who cares?
Author comment by george | June 22, 2006 at 8:45 am
I am going to post a follow up article summarizing this entire issue.
Ben I | June 25, 2006 at 1:28 am
Your points are sort of valid, but a question about the image statement you said, isn’t owning a Prius a big image thing for you, I mean, you would never want to be seen in a Suburban, right?
Also, by limiting tax incentives and therefore eventually killing off GM, Ford, and DCX, you lose about 750,000 jobs in total world wide GM holding 113,000 and Ford holding about 83,000 jobs in the US respectively.
Japanese companies such as Toyota, Honda, and Nissan can only fill 555,781 currerntly worldwide put together so how are they to accomodate an additonal 750,000 workers whose lives were ruined by losing their previous job at GM, Ford, of DCX.
The environment should not take precedence over the economy and the society as well as the peoples’ well being.
And that last comment, “who cares”, is obviosly not a very educated response. An automaker cannot accurately claim themselves as the most fuel efficient automaker if they themselves don’t have a full line like the competition. It’s like comparing rice to bread, they don’t match. A more fair comparison would be Nissan to Ford or Chevy or Dodge as they have a full line.
Author comment by george | June 25, 2006 at 11:40 am
No owning a Prius is not an image thing for me. I don’t care what car I drive – I just don’t want to drive something in excess of what I need. If I drive alone, I don’t need a suburban. If I have a family of 7, and I need to drive them around, then I’ll buy something big. My car choices revolve around buying the best quality version of what I need.
Also, by limiting tax incentives and therefore eventually killing off GM, Ford, and DCX, you lose about 750,000 jobs in total world wide GM holding 113,000 and Ford holding about 83,000 jobs in the US respectively.
I think you mean by not limiting. Getting rid of the caps is not going to kill any companies. This is not a make-or-break tax change.
Japanese companies such as Toyota, Honda, and Nissan can only fill 555,781 currerntly worldwide put together so how are they to accomodate an additonal 750,000 workers whose lives were ruined by losing their previous job at GM, Ford, of DCX.
1. GM, Ford, etc are laying off workers every day now.
2. The jobs lost by these companies going under, if they do, will be replaced by other companies that take their place. It’s not like production is going to move overseas… that raises the cost too much.
3. Where are you getting these statistics?
An automaker cannot accurately claim themselves as the most fuel efficient automaker if they themselves don’t have a full line like the competition.
I disagree.
Leave a comment!
<< Clarifications and Solutions to the Hybrid Tax Incentive Issue
“What should be done? The cap should be placed when the market is saturated with hybrid vehicles – not when one manufacturer sells enough of them. Why should a hybrid made by general motors that gets 20 miles per gallon get a tax credit in 2007 when a Prius receives nothing because it’s been two years since Toyota sold 60,000 hybrids? The best hybrids should be on the road – not an equal distribution of hybrids from every manufacturer.”
If the market is saturated, then why should there be any tax breaks anyways? If anything there should be a tax on those cars for the creation of disposal plants for the hybrid batteries.
You often cite General Motors as being the most inefficient automaker, or at least you imply that, get the facts right first, look at Dodge first. Here are some inefficient ones from Dodge: Viper, SRT models, Dodge Ram with a HEMI V8 and the most inefficient
pickup; the Dodge Ram SRT10
Your last sentence is very conservative in nature. You are only favoring those who are among the highest and best in a group, in this case cars. Much like tax breaks for the wealthy. Like all things, developing technologies for new applications is long and extensive. The Prius was easier for Toyota because is only has to do one thing, drive from A to B. The Silverado pickup and Sierra pickup do a multitude of things like towing, hauling heavy loads, and actually working hard, something the Prius cannot do, and lest us not forget going from A to B.
And if you’re all for high mpg and reducing our consumption, why would you want to get rid of the only hybrid pickup out there? It is counterproductive. It is that because when you get rid of it, mpg goes down and consumption goes up amongst the pickup segment. And who cares if it only gets 20 mpg? That is extremely good considering it has a V8 with 295 hp and stands out amongst the 12, 13, and 14 mpg half-ton pickups out there.
If anything, producers who make large vehicle hybrids SHOULD get the tax break and those who only make cars not get any since we already have high mpg cars that are far cheaper than a Prius and get good mileage so they don’t necessarily need any mpg improvement…now. Pickups and SUVs will always have to be here for what they can do that other vehicles cannot.
Society will never let their full size SUVs and pickups go George. People bought even more Tahoes after Katrina then ever before for a GM first quarter. Why not push mileage up in all segments, not just one?
Another thing, I accept your “energy policy” of needing to get 40+ mpg per vehicle. But, you cannot force your beliefs on others. Also, Honda only has one car that gets over 40 mpg, the Civic and should not be compared to other auto marques as they do NOT have a full line of vehicles, no full size SUVs, no true pickups, no high performance cars, not a one.
Peace out y’all!