dexeqex

Riddle me this:

Why is there a federal tax credit for buying a new hybrid car (more info: https://www.irs.gov/newsroom/article/...157632,00.html), but no tax credit for having no car at all?

If the goal is environmental conservation we shouldn't be encouraging people to ditch their old cars and get new hybirds because a lot of the environmental damage associated with automobiles occurs during the manufacture. Plus I'm fairly certain that the fuel economy of my bike is better than most any car out there.

Imagine being able to go to the DMV to get an official document that states that for the year 2007 you had no vehicles registered in your name. Then, you could include said document in your Federal tax return and, Voila! "A tax credit is subtracted directly from the total amount of federal tax owed, thus reducing or even eliminating the taxpayer’s tax obligation."

I'm trying to decide whether or not to write my congressperson, but I wanted to know what you guys think.

Cheers,
Dex

sykerocker 

Pressure groups (aka lobbyists) and the concept of environmental correctness. Besides, the current hybrid privileges have been shown to backfire: In the Washington, DC area it was shown that the primary incentive to buy a hybrid wasn't saving gas, limiting emissions or anything that would actually do any good.

The big incentive was being able to use the HOV lanes without having to put a second nasty, smelly passenger in your car. In other words, it completely defeated the effort to get people to use fewer cars on the morning commute.

I hate using the tax code for social engineering. Bring on the flat tax, where you pay a percentage of what you make, period. No breaks, no withholding, no nothing. And everybody can easily see exactly how much tax they pay. Of course, the politicians never want that to happen.

roseskunk

nice idea dex. makes sense to me.

bike2math

Meh. I don't think the tax credit offsets the many thousands the buyer will spend in interest, maintenance, and insurance over the life of the vehicle, hybrid or not, much less the gas used and the original price of the vehicle.

dexeqex

I'm not saying that it's worth it to go out and buy a hybrid if you're car free/light for the tax break, but right now, if you're in the market for a new car, there's a clear economic incentive to buy a hybrid. For a new Ford hybrid SUV you get a $2,600 credit! I think it would be really useful if there were a similar economic incentive to be car free.

I think another thing that is so appealing to me about this is that, in this era of tax breaks for the very wealthy, this is something that could positvely affect many of the poorest people in the US. Also, I'd end up with more money.

bragi

Personally, I like the idea of a tax credit for people with no motor vehicles; as has already been said, among other things, that would lead to more money for me. It won't ever happen in a million years, though. It's just plain incomprehensible to any member of congress, or most Americans for that matter, that the government would do anything to get people to spend less money on cars, petroleum, or dashboard Jesus bobbleheads. That would be simply un-American, something that Barak Obama's pastor might advocate.

donrhummy

You can't go "against" the car industry, so the way to do it would be a tax credit for going to work (a certain number of days out of the year) in an environmentally non-harming way. They could define that as public transportation, bikes, electric cars, etc. That's the only way you'd get a tax break for a bike, and even that's a bit of a long shot.

jcwitte

I think you'd have to look for a one time tax break like the one they give for "purchasing" a hybrid. It's not so much about being environmentally responsible as it is about contributing to the economy with the purchase. That's why they only get it for the purchase of a hybrid rather than simply driving one for that particular tax year.

Hobartlemagne 

Tax incentives are not established for moral behavior.
They are established for government approved behavior.

bike2math

I also think that to some extent car manufactures factor in the tax advantage of a hybrid when they price the vehicle. I really don't think that in our free(ish) market that the government can give a tax advantage (or rebate, cash back, lower interest rate, etc. ) for a product without it being compensated by an increase in the price of that product.

For example the price of HDTV converters seems to have risen now that the government is offering the rebate coupons for them.

---

Would I like the government to give me money? Sure. But if say they gave a tax advantage worth $100 towards the purchase of a bicycle, I would expect the price of bicycles to go up $100 (or more). So sure, someone will be making more money, but I'll eat my bicycle if it ends up being me.

wahoonc

Yep...personally I think that the tax "incentives" are nothing but a feel good game. If you want to make it fair, get rid off all the various nickel and dime taxes and go with either a VAT or use tax. The less you use or spend the better off you will be.

Aaron

E-quality

I haven't read the rest of this thread yet.

Some lawmaker/s likely got some good campaign donations from certain people/groups/corporations to cleverly increase the sales of the these cars with newer technology that cost a lot of money to develop. They can pretend that they care about the environment (and get votes from "environmentalists") by passing a law that provides tax breaks to people that buy these cars. This makes the manufactures of these cars more money because it helps to sell these cars. It's business and, yes, our government is for sale.

What's the benefit for lawmakers to create a law that provides tax breaks to people without cars? Do you think your congressperson cares that you'd like a tax break because you ride a bike instead of a car?

SSmith

Jesus, conspiracy theory much? Promoting hybrids over regular cars is a GOOD thing, why does everyone get on the bashwagon about it? I say bravo government, you got something right for a change.

The economic benefits of being car-free speak for themselves, I for one don't need a government handout.

cutman

I think tax credits have traditionally been instituted to help someone when they incur extra expenses, like having a child, for example. By not owning a motor vehicle, we're usually saving money by choice, and therefore a tax incentive isn't necessary. The whole energy/environmental aspect of living car-free isn't even considered.

That, I believe, is the old school of thought.

In the new school of thought, there ought to be tax incentives for living car free, especially since there are already tax credits going to those who drive hybrids. And like I've always said, the SUV driver who only uses the thing a few dozen times a year is more favorable in my book than the hybrid driver who commutes 50 miles round trip five days a week.

I like the idea of an official DMV document. That seems to be the only legit way to prove car freedom. I think I'm going to write to my congressman about this.

CaptainCool

Buy a hybrid: $30k cost - $3k credit = $27k spent
Don't buy a hybrid: $0 spent

Where's the problem?

Juha

+1. I live in a country with VERY high taxes on car prices. Not buying a car is a tax incentive in itself.

--J

cutman

No, they didn't get it right.

Maybe it makes sense to incentivize driving a Toyota Prius or a Honda Civic hybrid, but does it make sense to promote the 2008 Chevy Tahoe hybrid which achieves a whopping 20 MPG? The 2004 Ford Focus my girlfriend and I drive maybe twice a week gets 30 MPG, 50% better fuel economy than the Tahoe, but somehow that's not eligible for a tax credit.

Something's not right.

SSmith

Its also about 7mpg better than a regular Tahoe, so I'd still call it a win for hybrids. The simple fact is, a Focus and a Tahoe aren't in the same class. If you're going to buy a Focus, you might consider a Civic hybrid, but you're just not looking at buying an SUV, and vice versa.

If you want to say SUVs are bad in general, that's fine, but thats what you really mean, not that hybrids are bad.

Roody

I'd rather see motorists paying the full price for their transportation choice, without the taxpayer subsidies for highways, accidents, pollution, health costs, wars for oil, etc., etc.

stormchaser

Problem is fuel taxes are not sufficient to maintain roads & bridges. Starting to see more stories on infrastructure problems in the media. Many bridges around here not suitable for school buses to cross, so county school systems end up spending 15% extra per year to route around those.

Fuel taxes should be high enough to cover all of these costs without taking money from somewhere else, nor should these taxes be spent on anything else. So fuel tax around $9.50/gallon, which would be plenty of incentive for the use of smaller cars, hybrids, public trans & cycling.

E-quality

I kinda like this except you have to factor in cyclists and pedestrians using the roads. They wouldn't cause wear but bike lanes, sidewalks, crosswalks, etc. have to be built for them. I think this accounts for a very small percentage of the overall costs so motorists should pay most. One could argue that sidewalk and crosswalk costs should be taken from general taxes though. One could also argue that bike lanes aren't really necessary...it kind of depends on the road/area/type of traffic though.

Cosmoline

There should be a deduction for commuting by bike, certainly. A credit is probably asking too much.

wahoonc

No that isn't a win for hybrids it was a score for the US auto manufacturers lobby. There is no reason that the average American commuter needs a 5,000+# vehicle to haul his 250# ass around. If they were really interested in conservation they would have been pushing the C.A.F.E. numbers for the past 20 years or so, allowing different classes of vehicles...like cycle cars (small 3-4 wheeled lightweight cars). As is typical of a lot of government actions it is a knee jerk reaction that doesn't have much to do with reality.

If someone wants to drive a 20mpg vehicle let them pay the costs involved.

Aaron

SSmith

It's not necessary for the average consumer you are right, but there is a market for SUVs which doesn't involve soccer moms.

Again, if I'm going to buy a CAR I might just consider getting a hybrid car because of a hybrid subsidy, similarly if I'm going to be buying an SUV. If I'm going to be buying a CAR I'm not going to go out and buy a hybrid SUV because of a subsidy.

cutman

It's a valid point, but all it proves is that the tax incentive has absolutely nothing to do with fuel economy, energy efficiency or air quality/climate change. The incentive is designed as another way to pimp hybrid vehicles as a solution to a problem without behavourial change.

If there's going to be tax incentives, they ought to be based on a vehicles fuel economy - regardless of vehicle type. So if you set the bar at 35 MPG or better for a tax incentive, a 36 MPG hybrid SUV or a 41 MPG non-hybrid compact would both be eligible.

(I don't know if either vehicle exists, but it's just an example).

Or better yet, go with the original post in this thread: only give the tax incentives to those who have no vehicles registered.