A big tax bill is working its way through the U.S. Congress, and it includes incentives for electric cars, which as Jim Motavalli noted recently in Treehugger, is causing its own controversies. But there is also a provision that creates a tax credit for electric bicycles, which had its roots in an earlier bill promoted by Congressmen Jimmy Panetta (D-Calif.) and Earl Blumenauer (D-Ore.). Panetta noted at the time:
Panetta wanted a 30% tax credit; that’s not what got into the bill after going through what the website Systemic Failure calls “the Legislative buzzsaw of the House Ways and “Means-Testing” Committee.” The act now offers half that in “Greening the Fleet and Alternative Vehicles"section 136407.
In summary, one can get a maximum of $1,500 or 15%, whichever is lower, and phases out after $75,000 of individual income or $150,000 of joint family income.
UPDATE: A reader points out that 15% of $8,000 is $1,200 so when they slashed the credit percentage they also slashed the maximum.
Electric Cars and Trucks
Now let’s compare that to the tax credit for electric vehicles with four wheels, in section 136401:
So the subsidy starts off at $7,500, with a boost of $4,500 if it is made in the U.S. in a union shop, the provision that Motavalli was discussing, and $500 more if it uses American-made batteries, totaling $12,500. Notably, “the amount of credit allowed for a qualified vehicle is limited to 50 percent of its purchase price.” And what are the limits?
“No credit shall be allowed for vehicle by which the manufacturer’s suggested retail price exceeds the applicable limitation,” which is as follows:
- Sedans: $55kVans: $64kSUVs: $69kPick Up Trucks: $74k
The credit is phased out by $200 for each $1,000 of the taxpayer’s modified adjusted gross income as exceeds $800,000 for married filing jointly, $600,000 for the head of household, and $400,000 in any other case. For a given taxable year, the taxpayer may use modified adjusted gross income for that year or the immediately preceding year, whichever is lower.”
Now let’s compare the subsidies:
Now it is true that there are not many e-bikes made in the U.S., and that $5,000 of that electric car subsidy is going to promote American-made vehicles and batteries. But when the point of the bill is to promote greening the fleet, why such an obvious bias to promoting electric cars? Why do drivers of cars get up to 50% subsidy, while riders of bikes only get 15%? Why do families earning $800,000 per year get a subsidy at all?
Most of us agree that electric cars are wonderful and people love pickup trucks, and it is likely that many will complain that e-bikes are getting a credit of any amount. After all, they are just toys for the rich urban elite while pickup trucks are working vehicles for real Americans.
But hey, we’re in a climate crisis where we should be encouraging smaller and lighter vehicles and maybe even alternatives to cars. A little fairness and equity would be nice too.
