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Opinion Biden’s EV tax credits redistribute wealth … upward

President Biden tests the new Ford F-150 Lightning truck at a Ford facility in Dearborn, Mich., on Tuesday. (Leah Millis/Reuters)

Presidential gravitas swamped Michigan this week when Joe Biden announced that, regarding electric vehicles (EVs), the nation was at both an “inflection point” and a “crossroads.” After he remakes the automobile industry, his speechwriting shop should be next.

Hitherto known as “Amtrak Joe,” the president told Michiganders he is “a car guy,” which was well-received by automobile executives and autoworkers pleased by his industrial policy promoting EVs. This, like all his policies, is, he says, climate policy, and serves racial “equity” (by improving urban air quality).

What the White House calls a “fact sheet” says Biden’s administration will “support market demand” for EVs by “driving demand” with “point-of-sale incentives” to encourage “deployment” of EVs. Translation: Subsidies, including tax credits for purchasers, will fiddle the market by lowering EV prices enough to manufacture a demand sufficient to justify manufacturing the vehicles in quantities that the administration says are vital for the planet. Biden even wants $15 billion to build 500,000 EV charging stations. When U.S. automobile sales exploded from 8 million vehicles on U.S. roads in 1920 to 23 million in 1930 without tax credits, the private sector, responding to real rather than synthetic demand, built sufficient gas stations.

There are tax credits of up to $7,500 for EV purchasers, until a manufacturer sells 200,000. GM and Tesla have reached this cap. GM wants the tax credit restored and made permanent. Internal Revenue Service data for 2014 showed that the biggest beneficiaries were households with adjusted gross income of at least $100,000. One percent went to households earning less than $50,000. States, too, have joined the market manipulation. In California, where about 47 percent of EVs are sold, buyers can gain up to $15,000. That such subsidies “work” is shown by what happens when they end: In 2015, when Georgia ended its $5,000 state tax credit, EV sales plummeted 89 percent in two months.

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Biden’s policy to use less affluent Americans’ money to entice more affluent Americans to buy EVs is only one of the contemplated regressive policies by which his administration would transfer wealth upward. Another such policy would cancel student debts for some of the fortunate minority of Americans who, having college degrees, will likely enjoy lifetime earnings significantly higher than those of the less fortunate majority. And if Democrats repeal the $10,000 cap on deductions of state and local taxes by individuals filing their federal income taxes, this would almost entirely benefit very wealthy taxpayers.

But desperate times require desperate measures, and Earth, the administration says, desperately needs EVs. For reasons unrelated to climate change — including cost and convenience — the future of EVs probably would be bright even without government midwifery. Perhaps, however, these should be called “19.3 percent coal cars,” that being the percentage of U.S. electricity generated by coal. Furthermore, Bjorn Lomborg, a climate writer, notes, EVs require large batteries that “are often produced in China using coal power. According to the [International Energy Agency], just producing the battery for an electric car can emit almost a quarter as much of the greenhouse gases that a gasoline car will emit across its entire lifetime.”

The Obama-Biden administration “Cash for Clunkers” tried to meld economic stimulus and environmental stewardship. Consumers trading in old vehicles received vouchers for more climate-friendly, fuel-efficient vehicles — vouchers for $3,500 or $4,500, depending on the miles-per-gallon difference between trade-in and the new purchase. A Brookings Institution study found that the 55-day program’s $2.85 billion essentially shifted “roughly a few billion [consumers’] dollars forward from the subsequent two quarters following the program.” Most of the 677,842 sales — that many clunkers were traded in and, as required by law, destroyed — were just “slightly earlier [purchases] than otherwise would have occurred.” They did create some jobs — at a cost of $1.4 million each.

Nevertheless, Senate Majority Leader Charles E. Schumer, whose environmentally responsible recycling extends to recycling threadbare ideas, proposes $392 billion for 10 years of tax credits and vouchers for those who replace gas-powered vehicles with EVs. Biden wants to recycle the $7,500 EV tax credit. All such measures will have a climate impact too tiny to measure, given that U.S. personal cars, of which EVs will be a small proportion for many years, produce only 2.4 percent of global emissions.

In 1928, presidential candidate Herbert Hoover’s supporters said Republicans had put “the proverbial ‘chicken in every pot.’ And a car in every backyard, to boot.” Biden should promise coq au vin on every plate and two Teslas in every garage. Progress, or at least progressivism, is inexorable.

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