Senator Debbie Stabenow (D-Mich.) has reintroduced legislation to give buyers of plug-in electrics an instant rebate of up to $7,500 at time of purchase. Now, buyers have to wait for a tax refund to get their reward, and there have been 9,621 instances of people scamming the IRS by reporting unqualifying vehicles—like Hummer H3s, Moto Guzzis, and bicycles.
The Stabenow proposal also would give businesses tax credits for buying heavy-duty plug-in hybrid trucks and award some $2 billion in grants to companies making advanced batteries, electrical systems and components.
Our old buddy Ed Niedermeyer of The Truth About Cars has called it pork for Michigan, and I think he’s right. Whether it’s something more than that is the question. He also thinks the only other beneficiaries are wealthy EV buyers, who get a tax break since “nobody [else] is buying EVs as a purely financial choice.”
Well, come on, Ed. Wealthy buyers, any buyers, should get a break for supporting new technology, and if you have a better idea of how to support and diffuse green tech to early adopters, let’s hear it. The car industry has used incentives for years, and buyers are accustomed to them.
The difference with Stabenow’s legislation (which has little chance of passing, by the way) is that it gives cash up front, which is good for buyers, but the car dealers must recoup that money as a tax credit for themselves. And there is no way of determining what a buyer’s tax liability is in advance of his filing.
There are other kinks in the legislation, and the really offending part is that it’s nothing more than a giant earmark for Michigan electric car production—which Stabenow pretty much admits.
In his State of the Union message, President Obama spoke out strongly against earmarks, yet has backed a similar $7,500 point-of-purchase rebate to consumers. Whether he will go along with all of the $2-billion porkpie for Michigan industry is yet to be revealed.
Instead of trying to push demand this way, a better approach might be to “pull” it through direct grants for fleet and individual purchases, like the city of Amsterdam did in the Netherlands. They offered “grants up to €45,000 for the purchase of electric vehicles and up to €250,000 for fleets buying 20 or more EVs.”
To get this technology adopted, we have to prime the pump in some way. Is the Stabenow approach right or wrong?