Senate Republicans rolled out their version of a tax reform bill last week, and unfortunately, it's working from the same idea as the House version: Slash taxes for the rich and corporations and attempt to pay for it by increasing the deficit and jacking up effective tax rates on middle-class families. Interestingly, however, there is one important tax credit left in the Senate bill that the House bill attempts to eliminate: The $7,500 credit that one can get by buying one of the 30 or so models of electric cars now on the market.
The contrast is curious, as Senate Republicans generally seem just as intent as House Republicans on using tax reform as a cover for massive giveaways to oil interests. As Salon reported earlier this month, Senate Republicans are using possible tax cuts, and the resulting need to pump up government revenues, as an excuse to open up oil drilling in the Arctic National Wildlife Refuge, even though all available evidence suggests that the money generated under current oil prices would be a comically tiny pittance.
It is worth noting, however, that this discrepancy reflects a very real conflict that's starting to arise between auto manufacturers, who are eager to increase the market share of electric vehicles, and oil interests desperate to keep gas-guzzling cars on the road.
"There is no question that the potential elimination or phase-out of the electric vehicle tax credit will impact the choices of prospective buyers and make it more challenging for manufacturers to comply with electric vehicle mandates in 10 states," reads a statement issued by Auto Alliance, which represents a consortium of major manufacturers, including Ford, General Motors, BMW and Volkswagen.
“If you look at total cost of ownership and factor in the cost of the vehicle, the cost of fueling and the cost of maintenance, many electric cars are already cheaper on a total cost-of-ownership basis than conventional vehicles," Gina Coplon-Newfield, the director of the Clean Transportation for All Campaign at the Sierra Club, told Salon. But she added that the average electric vehicle is still slightly more expensive at the point of purchase than a conventional vehicle, describing the federal tax credit as "a helpful incentive for American consumers to make that switch to these cleaner vehicles that have so many benefits.”
The reality, Coplon-Newfield said, is that the government needs to do more to encourage consumers to make the switch — and not just because electric cars emit far fewer air pollutants and greenhouse gases than gasoline-powered engines.
“With the elimination of the EV [electric vehicle] tax credit, automakers in the U.S. [would] have even more of an incentive to focus on polluting gasoline-powered cars domestically, yet it would put them at a competitive disadvantage abroad," she argued.
A number of countries have chosen to meet their greenhouse gas reduction goals, set by the Paris climate accords, by phasing out gasoline-powered cars and eventually banning them altogether. China, France, Britain, India and Norway all have plans to ban the sale of gas and diesel-powered cars over the next decade or two. In Norway, electric vehicles already comprise 40 percent of new cars sold. (Of course, after President Trump's controversial decision to withdraw from the Paris accords, the U.S. is now the only country in the world not in the agreement.)
The Sierra Club recommends a twof0ld strategy: Setting a phaseout date after which gasoline or diesel-powered cars can no longer be sold, as those countries have done, and using market incentives like tax credits to ease the transition in the meantime.
In September, California Gov. Jerry Brown caused a minor media kerfuffle after Mary Nichols, chairman of the California Air Resources Board, said that the governor had asked about a statewide ban on gasoline-powered cars similar to the ones proposed in China and France.
“I’ve gotten messages from the governor asking, ‘Why haven’t we done something already?’” Nichols told Bloomberg. "The governor has certainly indicated an interest in why China can do this and not California.”
That story was widely reported, causing panicked tantrums in right-wing media, but there's no indication Brown's inquiry was motivated by anything beyond curiosity. Still, states do have the power to set tax incentives and, in some cases, emissions standards that can help push consumers toward electric. But without federal government support, those efforts would likely be in vain.
The ostensible reason for ending the electric vehicle tax credit would be to increase government revenue to pay for the corporate tax cuts Republicans desperately desire. But the truth of the matter is that while $7,500 is a hefty tax credit for individuals, it's peanuts compared to what climate change and air pollution are costing this country. Hurricanes Irma and Harvey will cost between $150 and $200 billion, according to expert assessments, and Hurricane Maria is estimated to add another $95 billion to the total. While these hurricanes were not caused by climate change, most scientists who study climate agree that they were intensified by it — and that escalating climate change will just make things worse and more expensive.
Similarly, climate change-enhanced wildfires in California are estimated to have caused up to $65 billion in damage. The costs from climate change are soaring to staggering numbers. At this point, it's clear that money spent on clean energy should be seen as an investment, and whatever profit is made on oil simply isn't worth the out-of-control expenses accruing from damage caused by climate change.
According to the U.S. Energy Information Administration, 92 percent of transportation fuel in the country is made from petroleum products. Widespread adoption of electric vehicles could drastically change that, which would not only help reduce greenhouse gas emissions but would accomplish more to help the U.S. achieve energy independence than drilling in federal lands could ever do. Republicans claim to be fiscal conservatives who value energy independence. The best way to show that is to move toward phasing out gas and diesel cars completely, and ushering in our quieter, cleaner electric future.
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