Want to Sell More Green Cars? Make the $7500 Green Car Tax Credit a Rebate

Some of you may be saying to yourselves “self, wouldn’t I automatically get the $7500 tax credit for buying a new hybrid or electric vehicle?”

I’m here to tell you, “self, unless you use the vehicle for business purposes, you will only see a fraction of that $7500.”

“Why?” you ask, puzzled.

If you look at the form, the key to enjoying the credit is to have a tax liability of $7500 or more. If you don’t hit that, say goodbye to the green car credit.

Why is that?” you ask.  “That’s…stupid.”

And to a certain extent I’d agree.  Before we understood people would buy green cars, the best bet on early adoption was with the wealthy.  If a rich guy or gal gambles on an EV and it goes south, they probably have at least one other car to fall back on–as well as the ability to buy a different vehicle.  A tax credit was a great way to induce them to join the green car movement.  But for the middle class and poor, who generally get refunds…the tax credit doesn’t work so well.

The other thing that muddies the water for the $7500 tax credit is with battery kWh.  The green car credit formula begins at $2500.  Then for each kWh over 4 the feds add $417 until you get to $7500.  Hybrid cars mean less credit.

So let’s make it easy.  Get rid of the existing green car tax credit structure and turn the $7500 into a rebate.  Let’s make it easier for everyone outside of the top 5% to buy green cars, and turn the green car tax credit into a rebate.  Let’s get rid of the lists, annual numbers sold, and the 2-page tax form and turn the green car tax credit into a rebate.  Don’t differentiate between hybrid and EVs.  Turn the green car tax credit into a rebate.

If you do that, there’s no waiting until tax time for the likely not so great news.  You send in your form, you get a rebate.  Better yet, let the dealers claim the rebate on their back end.  They take $7500 off the price during the finance phase and send in the forms for Uncle Sam to pay them back.  The consumer saves the money and has no additional paperwork.

As much as I’d like to see the rebate extended to used green cars, say to buyers of one-owner green cars, the chances of that are nil with this particular strain of Congressional Republicans.

But at the very least, change the $7500 green car tax credit into a rebate.

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Sebastian James


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