Why I think tax rebates for hybrids should be ended

it's the carrot. Higher gas taxes are not politiacally survivable. We in Canada already have had one politician fall because he wanted higher gas taxes. If there is no carrot most don't consider anything that gets really high gas milage and reduces greenhouse emissions. Just a fact of life in the hybrid lane.

 

There hasn't been a tax credit for a hybrid yet, until you count the new bill that Bush hasn't even signed yet.

And, hybrids haven't broken a significant percentage of the market to justify ending of anything yet.

But, going on this route of thinking, why not also then raise taxes on cars that don't make a certain MPG level, or have > 200HP (even if not sustained)? That's a significant % of the market there, and that would really promote the main goal of reduced fuel usage.

 

Considering that under the new Energy Policy Act which is about to be signed into law contains a provision for scaling the tax credit in reference to a chosen benchmark of 2002 model year city EPA based on weight class, your hypothetical 22 MPG hybrid would simply not qualify for any tax break. The greater the increase in fuel savings over the benchmark, the greater the tax credit.

 

Edit: This post is in answer to the title post, not those that came after. Wow, zip zip zip 4 posts in a row. This title seemed to get a quick response.

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Actually, I think the opposite. A few million vehicles are sold in the USA every year.

Currently we may pass 175,000 hybrids this year. (My estimates may be off, but my point is still made.)

When hybrid sales pass non hybrid sales, maybe then we should cut back on the incentives.

In the meantime, the deductions should be triple what they are now. The deductions should be so high that a hybrid is cheaper than a non hybrid.

Plus, there should be an MPG or horsepower tax. Of course, that won't happen. It takes people focused leadership for something like that. And what we have in power now is industry focused leadership.

 

I don't know what New York is giving in tax incentives, but what you got from the feds was definitly NOT a tax credit, it was an "Adjustment To Income" (ATI) which is effectively a tax DEDUCTION that is available to anyone. There is a HUGE difference between a tax credit and a tax deduction.

 

Are you talking about tax deductions? That exists now, but credit is different from deduction.

Deduction comes off AGI; credit comes off tax owed. Deduction has a smaller effect than credit.

 

Responding to the first post. The new energy bill is addressing the flaw that any hybrid owner, regardless MPG, can get the tax deduction.

By giving a larger incentive to higher effienct hybrids, it will force auto manufacturers to reconsider producing something like RX400h or Honda Accord Hybrid.(too little improve on MPG) Not all hybrids are created equal.

Hybrids are still in its infancy. I really wish to see our Prius to up to 100MPG in the next 5 years! Hm... I don't own one yet...... waiting til next year.

 

I will agree with you that incentives should not be available to pseudo hybrids like the Silverado. Just having an electric motor does not a hybrid make. Tie them to emissions and fuel economy and then you've got something. I think the energy bill is starting to address that.

But not have them?

No.

Why shouldn't people who are putting their money where their mouths are get a little something? Why are government subsidies only for Corporate farms and big oil? Why shouldn't the little guy get something for doing their part when DC has failed to do anything?

The Government has subsidized SUVs and Hummers. It's our turn to be rewarded for being responsible.

When hybrids sales outnumber guzzler sales then we'll talk.

In the meantime....whatever they're doing is not enough. That 60,000 vehicle cap is a joke. An insult. It basically rewards the big three for dragging their feet and penalizes the pioneers (Toyota and Honda) for doing the groundwork.

Am I surprised?

 

Ideally, the government should not provide either incentives or disincentives for anything. Taxes should be taxes, not a system of special-interests-driven carrots on sticks. X% of what ever your income is or whatever you buy. File your tax return on a postcard. Government involvement in any problem more often than not ends up making the problem much worse. The imminent signing of the very complex Energy Policy Act of 2005 has me now seriously contemplating a 5-month DELAY in purchasing a highly fuel-efficient, low-emmissions vehicle!

As for the 60,000 number, it is NOT a "cap." The tax credit program is complicated and the media's attempt at watering it down for consumption by the masses is resulting in factual errors already...and the bill hasn't even been signed yet!

The 60,000 is only a TRIGGER which sets a phase out calendar in motion for that manufacturer. That phase out does not begin until somewhere between 3 and 6 months AFTER the trigger is hit. And then the phase out is for an entire year. Even in the last 2 quarters of the phase out calendar, 25% of potentially $2,750 ($687.50) for the Prius is more of a tax break than what is available for the current tax year under a tax deduction of $2,000.

All this attention on hybrids is also driving new incentives at the state level as well. In Connecticut, the 6% sales tax is waived on a new purchase. For a $25,000 vehicle, that's a $1,500 incentive.

IF/when the Detroit manufacturers actually take full advantage of the golden opportunity they're being handed for model years 2007 and 2008 remains to be seen. If they do deliver viable products in sufficient quantities (no waitlists), that will only mean that Toyota and Honda will have to compete in that environment and keep their prices well in check. Ultimately free competition is a very good thing.

 

In an ideal world, great.

If you find one, let me know.

In the mean time, some sort of carrot is needed. Manufactrers need to provide what people want to buy. The more people that want a certain product, the more likely they are to provide it.

We've discussed the American obsession with power and speed. There are discussions on the board now about future hybrids being designed to add power rather than fuel economy.

So switch the carrot.

HOV lane access is nice but it's limited by time and capacity. And not everyone needs HOV access.

Why not switch to speed?

55 mph is a lot more fuel efficient than 65 or higher. So create a lane only for the use of vehicles that get 50 mpg or more on the freeway. It can either be unlimited speed like Europe or maybe 70 mph. Hybrids that have the most fuel efficiency by default get to drive fast and everyone else gets the slow lanes. Yes, I know enforcement will be a problem. But how many people would consider a hybrid if they found out they could legally go as fast as they probably already are now, otherwise they're back to the old 55? It would both conserve fuel somewhat and boost both sales of hybrids and manufacture. If there is enough demand, they need to provide what the public wants or the public will go elsewhere. And as hybrid sales rise....change it to two lanes. I expect that hybrid technology will also keep up with demand and mpg will increase beyond the 50 mark.

Before you blast me remember....no plan is perfect. Is mine any worse than the incentives in the Energy Bill?

 

Sorry, I kinda got on my flat-tax soap box there in my previous post...didn't mean to blast. I like your creative thinking, especially ideas that are incentives and yet are not manipulations of a tax code that is already so convoluted that you need software to figure out your taxes. Only comment I have is that a HOV deal should not be restricted by whether it's hybrid technology or not, but rather, by a minimum qualifying MPG rating. This would weed out the hybrids that undoubtedly will be applied for added horsepower only.

The Energy Act should be reality on Monday, and it is what it is. Although complex, the idea of scaling the incentive to the degree of fuel economy improvement is very appealing to me. It does send a clear message to all the manufacturers, Japanese and domestic as well as consumers, that it's the improved fuel economy here that's of value, not simply just because it's a "hybrid" which blocks incentives from being applied just to boost horsepower. That will happen in some models, including possibly the Camry, but it will either qualify for only a small incentive or none at all.

 

law should be a hybrid that gets at least 40mpg, if there was no tax credit i wouldnt/couldnt justify buying a prius(my friends give me crap as it is)

 

Govenment mandates like this always cater to special interests or a plain stupid. They always over complicate the issue. Hybrid or non-Hybrid is not the issue. They should either mandate that vehicles sold must obtain "X" mpg and can "force" this with either a carrot or a stick. The stick approach is a tax on vehicles that get less than "X" while the carrot approach is just a Credit/Deduction for those that get over "X". Selecting a specific technology is almost always the wrong way to go as it precludes investment in what may be better technologies.

 

The more horse power the more you pay tax on it.

I believe in Germany you pay tax based on the horsepower.

Why does everything have to be BIG and powerful in the States? Reminds me of a Soviet mentality. They also wanted the biggest and the most powerful. I don't get it.
Maybe it's a small d**k complex.