5 ms·

> $7500 federal tax rebate, most people can't take full advantage because they don't owe that much I am pretty sure most of those who can afford to purchase a

by usaphp 9y ago

> $7500 federal tax rebate, most people can't take full advantage because they don't owe that much I am pretty sure most of those who can afford to purchase a 35k+ car are making at least 40k / year and owe that much in federal taxes, unless I am not calculating something right

phonon 9y ago
A family making $40k/y will have a negligible/negative federal and state effective income tax rate. A single person might be somewhere around 10% or less. Maybe you are thinking of FICA?
snuxoll 9y ago
What kind of tax rate do you think people are paying that they owe $7500 in federal taxes making $40,000/yr?
arrrg 9y ago
What I never really thought is that that‘s still a pretty dumb was to subsidize any kind of purchase. It massivly advantages the rich(er). Why do it that way?
- hedora 9y ago
  The US has a highly regressive tax system, at least for middle class earners and up. We do everything that way.
  - rhino369 9y ago
    No it doesn't. The fact that a 7k deduction doesn't help middle class people proves we don't have a regressive system. The US middle class is relatively lightly taxed.
  - cobookman 9y ago
    I think this helps the middle / poor class. Rich people lease expensive EV that would normally not sell. After 3 years rich person gets a new car and EV sells for peanuts. Just look at the cost of a used Nissan Leaf right now
- satya71 9y ago
  It's a set amount money set aside to jump-start the market. The subsidies will end when the fund runs out and pure (if there is such a thing) market forces take over. Fossil fuels are subsidized permanently, however.
  - greglindahl 9y ago
    "pure market forces" won't take over until the negative externality of pollution is properly priced.
    - rebuilder 9y ago
      Market forces alone will never fully price in pollution, IMO. There's no incentive to do so without regulation, and even if there were, I don't see how price discovery would work. The environment is not a market participant, unfortunately. Anyway, this is pretty far off the original question of why EVs are being subsidized via tax rebates in the US.
- imron 9y ago
  Early adopters help bring the costs down for everyone else. By making the car more affordable for wealthy (but not that wealthy) people, it eventually brings the cost down for everybody.
- SubiculumCode 9y ago
  And they get reserved parking spots at many deprtment store stoo, at least in CA.
  - tigeba 9y ago
    In my area when the first wave of EV spots went in they tended to be very 'premium' spaces. I think this was a result of novelty. Recently they have been making them the 'worst' spots or at least not 'premium' spaces and I think this is a better move. It also has reduced the instances of people parking ICE cars in EV spots.
- tigeba 9y ago
  Anyone that wants an EV ultimately benefits from the credits. Take a look at the prices of used EV's (other than a Tesla).
grigjd3 9y ago
On 40k with the standard deduction and claiming yourself, you pay just under 4k in federal taxes.
bzbarsky 9y ago
There is no way you owe $7500 in federal taxes on a $40k/year salary. In the worst case (single or married filing separately; in this range the numbers look the same), the standard deduction is $6350 and the single personal exemption is $4050 in 2017. So your taxable income is $29,600 assuming you aren't putting any pre-tax money into retirement savings. The 10% tax bracket for those filing statuses goes to $9325 in 2017. The 15% bracket goes to $37,950. Tax on $29,600 ends up being $3974. To get to $7500 in tax you have to have about $47k of taxable income, and hence about $57k of gross income, for single or married-filing-separately filers. For married filing jointly filers, you have to have about $56k of taxable income, standard deduction is $12,700, two personal exemtions is $8100, so you need at least $76,800 in gross income to owe this much.
- usaphp 9y ago
  > To get to $7500 in tax you have to have about $47k of taxable income, and hence about $57k of gross income The OP said “most people don’t pay $7500...” which is not true since I said you have to have “at least 40K+ salary in order to afford that $35k+ car. I did not say you have to have 40k salary to pay 7500$+ in taxes
  - bzbarsky 9y ago
    I admit I don't quite understand. What you wrote was "are making at least 40k / year and owe that much in federal taxes". My point was that you don't "owe that much in federal taxes" unless your salary is at least $57k. I have no opinion on what the actual incomes are of people who buy $35k cars, because I don't have any data to that effect. I'd really _hope_ they all make more than $57k/year gross, but given the weird things people do with debt I'd love to see actual data on this point.
    - usaphp 9y ago
      You are right, I did not phrase my opinion correctly.
- compsciphd 9y ago
pilom 9y ago
You're not calculating it right. 40,000 - 6300 for the standard deduction - 4050 for an exemption = ~29,000. First ~9000 is taxed at 10%, next ~20,000 for this person is taxed at 15%. Total income tax that could be reduced by the $7500 rebate for this person would be ~$4000 worst case.

by usaphp 9y ago

phonon 9y ago

A family making $40k/y will have a negligible/negative federal and state effective income tax rate. A single person might be somewhere around 10% or less. Maybe you are thinking of FICA?

snuxoll 9y ago

What kind of tax rate do you think people are paying that they owe $7500 in federal taxes making $40,000/yr?

arrrg 9y ago

What I never really thought is that that‘s still a pretty dumb was to subsidize any kind of purchase. It massivly advantages the rich(er). Why do it that way?

hedora 9y ago
The US has a highly regressive tax system, at least for middle class earners and up. We do everything that way.
- rhino369 9y ago
  No it doesn't. The fact that a 7k deduction doesn't help middle class people proves we don't have a regressive system. The US middle class is relatively lightly taxed.
- cobookman 9y ago
  I think this helps the middle / poor class. Rich people lease expensive EV that would normally not sell. After 3 years rich person gets a new car and EV sells for peanuts. Just look at the cost of a used Nissan Leaf right now
satya71 9y ago
It's a set amount money set aside to jump-start the market. The subsidies will end when the fund runs out and pure (if there is such a thing) market forces take over. Fossil fuels are subsidized permanently, however.
- greglindahl 9y ago
  "pure market forces" won't take over until the negative externality of pollution is properly priced.
  - rebuilder 9y ago
    Market forces alone will never fully price in pollution, IMO. There's no incentive to do so without regulation, and even if there were, I don't see how price discovery would work. The environment is not a market participant, unfortunately. Anyway, this is pretty far off the original question of why EVs are being subsidized via tax rebates in the US.
imron 9y ago
Early adopters help bring the costs down for everyone else. By making the car more affordable for wealthy (but not that wealthy) people, it eventually brings the cost down for everybody.
SubiculumCode 9y ago
And they get reserved parking spots at many deprtment store stoo, at least in CA.
- tigeba 9y ago
  In my area when the first wave of EV spots went in they tended to be very 'premium' spaces. I think this was a result of novelty. Recently they have been making them the 'worst' spots or at least not 'premium' spaces and I think this is a better move. It also has reduced the instances of people parking ICE cars in EV spots.
tigeba 9y ago
Anyone that wants an EV ultimately benefits from the credits. Take a look at the prices of used EV's (other than a Tesla).

grigjd3 9y ago

On 40k with the standard deduction and claiming yourself, you pay just under 4k in federal taxes.

bzbarsky 9y ago

There is no way you owe $7500 in federal taxes on a $40k/year salary. In the worst case (single or married filing separately; in this range the numbers look the same), the standard deduction is $6350 and the single personal exemption is $4050 in 2017. So your taxable income is $29,600 assuming you aren't putting any pre-tax money into retirement savings. The 10% tax bracket for those filing statuses goes to $9325 in 2017. The 15% bracket goes to $37,950. Tax on $29,600 ends up being $3974. To get to $7500 in tax you have to have about $47k of taxable income, and hence about $57k of gross income, for single or married-filing-separately filers. For married filing jointly filers, you have to have about $56k of taxable income, standard deduction is $12,700, two personal exemtions is $8100, so you need at least $76,800 in gross income to owe this much.

usaphp 9y ago
> To get to $7500 in tax you have to have about $47k of taxable income, and hence about $57k of gross income The OP said “most people don’t pay $7500...” which is not true since I said you have to have “at least 40K+ salary in order to afford that $35k+ car. I did not say you have to have 40k salary to pay 7500$+ in taxes
- bzbarsky 9y ago
  I admit I don't quite understand. What you wrote was "are making at least 40k / year and owe that much in federal taxes". My point was that you don't "owe that much in federal taxes" unless your salary is at least $57k. I have no opinion on what the actual incomes are of people who buy $35k cars, because I don't have any data to that effect. I'd really _hope_ they all make more than $57k/year gross, but given the weird things people do with debt I'd love to see actual data on this point.
  - usaphp 9y ago
    You are right, I did not phrase my opinion correctly.
compsciphd 9y ago

pilom 9y ago

You're not calculating it right. 40,000 - 6300 for the standard deduction - 4050 for an exemption = ~29,000. First ~9000 is taxed at 10%, next ~20,000 for this person is taxed at 15%. Total income tax that could be reduced by the $7500 rebate for this person would be ~$4000 worst case.