So how much of your tax money actually subsidizes plug-in electric and hybrid vehicles? Edmunds’ Inside Line totaled the numbers. It isn’t cheap.
$135 million in fed tax credits
According to the report, based on 2011 sales and lease numbers, American motorists leased or bought more than 18,000 plug-in electric and hybrid cars. That means $135 million was paid out in federal tax credits, or $7,500 per transaction, if the maximum was claimed.
Leaf and Volt highest sellers
The bulk of those tax credits were earned by the sales of Nissan Leafs and extended-range electric Chevrolet Volts. The Leaf made $72.5 million in federal tax credits, and the Volt earned more than $57.5 million.
Credit depends on tax liability
Because the incentives are in the form of tax credits, they cannot exceed any taxpayers total federal tax liability for the year. Therefore if a Volt buyer owed $3,000 to Uncle Sam, that taxpayer would only get $3,000 in credit on his or her green car, although the maximum remains at $7,500.
Local and state incentives
But that is not all. According to the U.S. Department of Energy, state and local governments also offer more than 500 tax credits for buyers of plug-in cars. With combined state and federal incentives, Edmunds’ Inside Line estimates that American taxpayers shilled out more than $150 million in EV and hybrid incentives last year.
Obama wants to extend incentives
Early in his administration, Obama said he would like to see 1 million plug-in vehicles on the nation’s highways by 2015. He has sought to accomplish that goal with federal incentives, but sales have not increased to a sufficient degree to make his goal seem likely. Earlier this year, the President recommended not just extending the incentives but increasing the maximum from $7,500 to $10,000 per sale or lease. Also, he wants that discount to be incurred at the point of sale, not after the car buyer files his or her next federal income tax return.
Incentives paid to automakers
What about the incentives for automakers? Those come out of your tax dollars also. The U.S. Department of Energy paid more than $10 billion to automakers producing alternative energy vehicles, batteries and parts in 2011. Eighty percent of that money was paid in the form of low-interest loans that were approved the previous year. Ford has been awarded $5.9 billion of that money. Nissan has collected $1.4 billion. Fisker was given $529 million and Tesla took $465 million.
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