Was reading this article today on a bill Bush is planning on signing into law. The bill will allow for up to $3400 in a direct tax credit for the purchase of a new hybrid (I don’t think you get anything if you already own one if I’m understanding correctly).
So, thoughts? On the surface it sounds like just what the eco-minded would want from a democratic president. Whats the downside…if any? What problems do you have with this bill…or what do you find good about it?
-XT
A fig leaf for all the other Big Oil giveaways the current Administration has been handing out since Bush got into office. A good sound bite for the gullible, but nothing more.
You may be right, but if you’re one of the buyers who purchase a hybrid and get the tax rebate, its better then getting one without it.
Wow, no thoughts on this except rjungs usual knee jerk analysis? 
Dunno…sounds pretty good to me. I’m actually kicking things over with the wife to see if we can swing a Prius in January. $3400 is a pretty good incentive IMHO…I can always use the tax right off…and of course saving money on gas seems a good idea to boot.
-XT
I think it’s quite a reasonable policy, though it’d make more sense if it were about fuel efficiency period, and not just about hybrids. If I were the manufacturer of a microcar with amazing mileage but no hybrid drivetrain I’d be a tad peeved.
I hear you. But…
I think the idea is to provide a consumer-based economic incentive to auto manufacturers (and the technology developers behind them) to come up with progressively better and better non-petroleum-based automotive technologies.
Even a car the gets 100 miles to a gallon of gas is still burning gas.
Maybe not perfect but vastly better than the alternate fuels tax credit program Arizona had. People were flocking to get big engine picups and SUVs with an installed dual fuel system. Unfortunately the typical system had a CNG tank that fit in the spare tire well, barely big enough to be useful, so nearly all were run on gas. They even get to use HOV lanes when driving solo because of special plates.
I bought a new car last year (a Subaru Impreza that gets almost 30 MPG).
So I hadn’t given much thought to another car until I retire in about 10 years (I keep them a long time).
Until gas prices started rising. And kept rising. And then, kept on rising…
So I have been thinking about what would induce me to buy a new car in less than 10 years. It would probably be a hybrid (I drive around 20,000 miles a year).
My qualified answer is: a combination of gas prices, tax incentives, and dropping prices of hybrids, as the market grows and the technology matures.
I need to digest the details of this incentive. Can someone explain why it phases out? I realize that we hope hybrids will get cheaper, so it may become less needed.
But if the government offers a tax break to encourage people to buy a more fuel-efficient car, they are trading tax revenue to decrease demand for oil. Until fuel prices start to level off, this sounds to me like a worthwhile tradeoff.
I’m an “eco-minded” democrat and I don’t like it. I’m all for hybrid cars, but I think our tax code is complex enough without adding yet ANOTHER special credit to it. And from the looks of it, it’s a complex credit, that’s going to require yet ANOTHER layer of beuracracy in the IRS to determine which cars are worthy of the credit and just how worthy they are.
I think we should be making our tax system simpler and not throw more mud onto the current ball.
Ok, you have me. Normally I don’t think much of such extensions to the tax code either, nor much of the government trying to use backdoor methods to subsidize an industry or a product. However, if the government is going to do it anyway reguardless of my own wishes, I am thinking this might be a good thing to take advantage of…I’m definitely going to look into it.
I agree with you also about the complexity of this plan. Granted I don’t know a lot more of it than was given in the article, but it seems overly complex, with a sliding scale of payments depending on how good the gas savings are…and ignoring other alternatives or vehicles that just get superior gas milage. In addition I thought the provision of “first 60,000 qualifying vehicles that your automaker sells” was…odd.
Personally, except that this comes from Bush (and the odd nature of the provisions) I’d think most ‘eco minded Democrats’ would jump at this as a good thing. I’d think the major bitching on this would come from the fiscal conservatives.
-XT
I hear you. But… 
Hybrids still derive all their energy from gasoline, though I’m given to understand that there’s some movement to charging the batteries off the grid when not driving, which would change that. So this isn’t really an incentive to produce better non-petro cars, exactly.
Don’t get me wrong. I am in favour of tax incentives for higher efficiency/non-petroleum based vehicles/alternative and renewable energy sources. The particular structure of this one strikes me as rather sub-optimal, but I support the basic principle.
It’s a tough one when a plan that you think is actually useful collides with your own philosophy about what government should do. That’s sort of where I’m at. It sounds like a good plan, and I think hybrids make a pretty good intermediate step in development to the kind of car we’ll eventually be driving.
If more people buy hybrids, more money will be invested in hybrid technology. We’ll get more efficient motors and batteries, better control systems, and those components will still be around when we finally settle on a new fuel, or even if we manage to continue with gasoline. If you have a good powertrain based on electricity, you can plug in batteries charged from the grid, a gas engine, a fuel cell, or your Dr. Atomo home nuclear battery kit.
And the idea of tying to the savings on in that weight class vs absolute savings makes sense too. Some people who own a pickup need a pickup. So if you can make one available that uses 30% less gas, hey great. It doesn’t matter if there was a great rebate for a super efficient hybrid, the pickup guy won’t buy one. So that kind of rebate skews down to only the subset of the marketplace that already drives small, efficient cars. Much better to devise a system that allows you to offer something for everyone in the marketplace. It’s going to be much more effective in lowering overall CAFE numbers.
I forgot the ‘on the other hand’. On the other hand, I’m generally against the government trying to pick winners and losers in the economy. That’s the argument against industrial policy in general. The government’s track record is horrible when they get into this sort of stuff. Perhaps a hybrid rebate would simply divert resources away from some other market solution we can’t see right now. Or maybe it’ll just wind up costing so much money vs the effect it has that it will turn out to have been a waste.
Thats kind of the same boat I’m in on this one too Sam. On the one hand this goes against my own philosophy of how government should work…and what it should do. I’m skeptical that the government, any government, can make good decisions with reguards to this kind of thing.
On the other hand this actually, on the surface, seems like it might be a good idea. I’m a bit put off by some of the provisions but over all it seems like an interesting way to stimulate companies to look at alternatives…at least to look into hybrid technology. The added money to those companies is sure to spur SOME kind of development as companies strive for the top mark in efficiency (to attract more folks who are looking to get the top credit for their purchase).
I just don’t know…which was why I started this debate. I really expected to see a different response that what I’ve gotten so far which is interesting in itself.
-XT
There’s something to this argument, but I think it can be (and often is) overstated. In the case of petroleum consumption, there are well known external costs (pollution, depletion of finite resource) that are not reflected in the market price, or at least are under-reflected, if you will. Creating tax incentives to act as a drag on petroleum consumption and a stimulus to developing alternative energy is only offsetting the market’s failure to reflect those external costs.
What I don’t like about this particular tax rebate is that it appears to be overly specific. As you say, maybe there’s some other solution that we aren’t seeing right now that won’t get developed because everyone will focus on hybrids. A differently structured incentive needn’t have that particular problem. That’s a matter of details, though.
I also find your point re: pickups interesting. That hadn’t occurred to me. Should have, given that I live in pickup central, but hadn’t.
What’s wrong with using the market to stimulate companies to look at the alternatives? When/if consumers start really getting squeezed by high gas prices, there’ll be a huge demand for cars that use less (or no) gas. It seems like that would “stimulate” the companies to develop alternatives far more strongly then a tax credit for (some) hybrids.
Or do you think that petroleum prices are going to rise so catastrophically that the auto companies will fold before they can develop good alternatives?
Just so I don’t come off sounding like a conservative or anything, I’ll add that I’m not at all opposed to big government in general, and that there are plenty of areas where I’d like to see the governments role expanded (e.g., health care).
But what I am opposed to is inefficiency (anyone not opposed to it? :)). And, more then anything else, this measure seems inefficient. What problem is it trying to solve? Pollution? Dependence on oil for transportation? A lack of research into alternative power plants for cars? For all the possible benefits that may arise from this provision, it seems like there are MUCH more efficient ways to do it.
If we want more research into alternative power plants, then we could accomplish that more efficiently by funding research grants for universities and companies. If we want to reduce pollution, we could pay for emissions upgrades for older power plants; or buy and scrap dirty old cars still on the road; or build good public transportation systems; etc.
Not initially, no. First, the auto-buying market has to become comfortable with the idea that hybrids are practical, and affordable. A hybrid car that’s so unique, a novelty for the rich and eccentric, that it ultimately costs more than its savings in gas (even at it former, lower prices) won’t garner enough market share to induce auto manufacturers to invest in shifting corporate infrastructure around to researching, designing, and building hybrids that are affordable to the mass market.
This tax incentive for consumers can possibly provide the impetus, or at least get the consumer market moving in that direction. It avoids the political trap of “corporate wealthfare,” that corporate tax incentives for research, development, and “restructuring” would surely be labeled.
And once the vast majority of the consumer market is actually buying and driving hybrids, the steady advance of technology, fueled by consumer choice, can gradually alter the ratios in the hybrid further and further away frm the petroleum-based portion of the hybrid until it goes buh-bye entirely.
One of the problems I see with this approach is politics. Politicians, government bureaucracies, and committees will determine which university or company gets government grants, leading to the possibility of corruption, charges of corruption, and rancorous partisan politics.
A tax credit like this will enable the millions of consumers to reward the best company, the one that produces the best, most efficient automobile. This will motivate the various auto manufacturers to design and produce a better vehicle (or at least a better ad campaign :rolleyes: ) than their competitors in order to secure market share.
This seems like a cheap concession to me.
The people that will apply this credit are the people who were considering small fuel efficient cars to begin with. The SUV trend began in a time of high gas prices and isn’t really slowing down despite the fact that it’s pretty much acknowledged tht gas is just going to get more and more expensive. If people were interested in saving money, they’d already be buying fuel-efficent vehicles- an SUV costs a hell of a lot more to run for a year than a smaller car. It seems that for the large part Americans just arn’t enticed by money (quite yet, at least) to boost fuel efficientcy.
Let me add on that I would much rather see this money go towards workable mass transportation systems and building transport friendly cities. This sort of investment will solve the real problem- that individual transportation is an extremely inefficent way to move around and in much of America it will eventually become an unviable system.