Government Electric Car Subsidies Are 'Costly Subsidies for the Rich', Finds New Study

99 Percent of Total Tax Credits Go to Households with $50K+ Incomes

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Feb 13, 2018, 08:35 ET

SAN FRANCISCO, Feb. 13, 2018 /PRNewswire/ -- Generous, taxpayer-funded subsidies for electric car purchases have become just another costly subsidy benefitting the rich, finds a new study released today by the California-based free-market think tank, the Pacific Research Institute.

Click here to download a copy of "Costly Subsidies for the Rich"

"When politicians talk about the need to subsidize costly electric cars, they fail to tell you that the hundreds of millions of dollars of subsidies that taxpayers are paying for are just another giveaway to the wealthy," said Dr. Wayne Winegarden, the study's author. "After reading our new study, taxpayers should start asking elected officials what benefit we are getting from these expensive subsidies that only benefit upper-income households."

In his study, Winegarden examines what local, state, and federal governments are spending on subsidies for electric car purchases and manufacturing, and the installation of charging stations.

According to his research, 79 percent of electric vehicle plug-in tax credits were claimed by households with adjusted gross incomes of greater than $100,000 per year. Households with incomes greater than $50,000 per year claimed 99 percent of the credits.

He found that federal manufacturing grants and loans have a worth of $40.7 billion over the lifetime of the programs, while also offering consumers $2 billion in federal tax credits to subsidize electric car purchases, up to $7,500 per car.

State tax credits and subsidies vary but can add up to $13,000 or more per consumer in states like California, when combined with all available local and federal credits. Some states offer other benefits for driving an electric car, such as being able to drive alone in carpool lanes.

"Many of the new electric cars being produced today are great vehicles, but there isn't a mass demand without government playing car salesman, and there's a real question whether subsidies bring a big environmental benefit," said Winegarden. "If government wants to encourage an electric car future, it should embrace the free market and remove the barriers to cheap and efficient car manufacturing that drive up costs too high for most drivers."

Dr. Wayne Winegarden is a Senior Fellow in Business and Economics at Pacific Research Institute. He is also the Principal of Capitol Economic Advisors and a Managing Editor for EconoSTATS.

The Pacific Research Institute (www.pacificresearch.org) champions freedom, opportunity, and personal responsibility by advancing free-market policy ideas. Follow PRI on Facebook, Twitter, and LinkedIn.

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SOURCE Pacific Research Institute