Stupid hybrid tax incentive quotas

I already own a hybrid (a Ford Escape) but am toying with the idea of going for the gusto by trading in the old Ford for a gas-sipping Honda Civic or Toyota Prius hybrid. When I bought my Ford, Uncle Sam sweetened the deal by giving me a tax credit of around $2,000, so my expectation was a similar financial incentive if I went for a more economical model. Not so fast! In its infinite wisdom, the federal government created one of the dumber set of guidelines you could ever imagine.

Once a manufacturer (for instance, Ford, Honda, Toyota, etc.) exceeds sales of 60,000 hybrid vehicles, the IRS phases out tax credits over the course of a year. Since Toyota is killing it with the Prius, it passed the 60,000 mark years ago.

So here's the net effect. If you decide to buy a Prius, decrease the United States' dependence on foreign oil, help improve national security, and do your part to reduce carbon emissions, you get nothing in return because the federal government came up with some lame-brain quota system based on manufacturers and brands of cars. Ridiculous!

I know I'm out on a limb, but I firmly believe that with gas at over $4 per gallon in many areas, the federal government should be reducing the speed limit, pushing states to eliminate tolls, and absolutely persuading taxpayers to buy cars with higher mpg. Given the energy goals we hear everyday from the presidential candidates, the cap on hybrid tax credits is just plain stupid.

Jon Oltsik is a senior analyst at the Enterprise Strategy Group.

[Norseman]

Amen, Jon. I bought a Toyota Camry hybrid about a year ago, and lost out on what the tax incentive would have been if I'd got it a year earlier. I wish more of our legislators were "out on a limb" with the ideas in your last paragraph.

[mccutty]

The Prius does not need a taxpayer subsidy. Toyota continues to increase the sticker price. The free market (gas prices rising) is working to drive Prius demand and reduce gas demand in the near term. Federal Dollars should go to new R&D for batteries, fuel cells, and other measures to curb fossil fuel demand over the long haul.

[EnvoyPV]

I couldn't have said it better, myself, mccutty. If there are going to be incentives, they should be used to bring additional products to the market, not to provide a bonus to products which have already proven themselves in the market.

[Get_Bent]

In other words, you're complaining because the U.S. taxpayer isn't forced to subsidize your purchase of a new car. Wah! I'm fed up with the IRS raiding my wallet so the government can give my hard-earned cash to someone else. I could use that $2,000 to buy 500 gallons of gas for my car.

Your primary reason for buying a hybrid car is to save money by purchasing less gas; all other issues are secondary. I have no problem with that. If it makes good economic sense for you, then go for it. But you should pay for it out of your own pocket. If the car is a fuel-efficient at you've been led to believe, you'll recoup the added expense after a few years. if it isn't, then this wasn't an economically viable idea after all, was it?

[Pixelslave]

It is stupid, but man, what do you expect from our government? As for reducing speed limits, I highly doubt the usefulness of the policy. Please tell me the last time you see a car running below highway speed limit! I will support that policy if our government can find a way to enforce it -- and enforce it without making some extreme liberals cry out loud for privacy invasion. Last time I checked, those people complaints when local government installs more red-light cams on the traffic lights.

[baldguy61]

Lamebrained? Ineffective? Illogical? A waste of oxygen? Jon, you wouldn't be referring to Congress, would you? If you think that's something, wait until after the elections. Then you'll see no holds on the political correctness. We'll be run by unelected communists. Goodbye freedom.

[Get_Bent]

In other words, you're complaining because the U.S. taxpayer isn't forced to subsidize your purchase of a new car. Wah! I'm fed up with the IRS raiding my wallet so the government can give my hard-earned cash to someone else. I could use that $2,000 to buy 500 gallons of gas for my car.

Your primary reason for buying a hybrid car is to save money by purchasing less gas; all other issues are secondary. I have no problem with that. If it makes good economic sense for you, then go for it. But you should pay for it out of your own pocket. If the car is a fuel-efficient at you've been led to believe, you'll recoup the added expense after a few years. if it isn't, then this wasn't an economically viable idea after all, was it?

[Frewgle]

Exactly! The government should be giving research grants out left and right for fuel cell research and development. Everybody wants the government to give them money and take care of them - good grief.

[GetOverIt88]

The quota is no more ridiculous then the tax incentive itself. Since when was it the government's job to incentivize consumer purchases with tax payer's money? I agree that hybrid vehicles and any other energy saving technologies are good ideas but let the market decide.

[georgiarat]

You obviously live in or around a large city. You expect a handout from the government, don't value time lost for those traveling outside a city (why would someone want to live in a rural area), and you have toll roads (government taxation for highways already constructed).

[willdryden]

In Texas, toll roads are not paid for by tax money. They are paid for by issuing bonds. As soon as the bond holders are paid back, the toll booths are removed. In effect, the roads are paid for by the users of the roads, not the general tax payers.

[1224812248]

All you have to do is take the word "quotas" off this headline and then you'd have the truth. There is no reason for my tax money to subsidize your purchase.

[gerrrg]

Get_Bent, get a clue. Like any tax incentives, this is a deduction, and so you don't pay taxes on that $2,000. The government isn't giving you $2,000. The actual amount you save varies depending upon your tax bracket and your tax strategy. For the rest of you, if you're so against government giving tax breaks, stop filling out your tax forms with a standard deduction... and itemize with exactly ZERO pretax deductions. Don't take that handout, don't file for unemployment, don't deduct for your mortgage interest and property tax. Don't file for any education credits. Most of all, support Bob Barr and the Libertarian Party. Really, if you vote for the GOP, you're just voting for reallocation of tax monies. Ted Stevens' bridge to nowhere is an excellent example.

[AeroJonesy]

gerrrg,
A tax credit is not a deduction. Before you go into preachy mode, you might want to learn the difference.

Tax credits directly reduce one's income tax liability. A $2000 credit means that is $2000 you were supposed to pay in income tax, but are now relieved of.

[James7777777]

Are you brain dead?


There should never have been an incentive in the first place. If there is extra money from taxes, then taxes should be cut not given out to pios prius owners. That or it should be invested in new technologies to remove us further from fossil fuels.


Reducing speed limits!!! Yes adding more laws and giving cops more of an opportunity to hand out tickets is a great idea. Speed limits are not causing problems (except in the many cases they are too low).


I agree with eliminating tolls, but one point in a completely brain dead post does not make you any less brain dead. Now shut up and go buy your own car rather then expecting everyone else to buy it for you.

[Jack K1]

The Geo Metro gets about the same gas mileage as a Prius. Suckers.

[raywkirk]

Really? 50mpg highway with the A/C running hard?

[4951ha]

to Math genius Jack, NOT, and you are still driving a Geo.....ewwwwww!

[olliefog]

Expecting a government tax break to buy a car is absurd. If we had a whole lot less government "incentives" maybe our tax obligations would go down. Speaking of hybrids, if they're so good on fuel why do you need the incentive? Yahoo did an analysis on hybrids 2 weeks ago - the average payback on a purchase of a hybrid vs. the non hybrid was between 7 and 9 years depending on the models you are comparing. That means the additional cost of the hybrid has to be paid off before you actually save money. Some deal.

[gerrrg]

Actually, I'm pretty sure that if the Prius continued to have a tax credit, it would only exacerbate the shortage of Prius, resulting in a faster price increase at many dealerships. The tax benefit was only needed when the cost of gasoline was lower. As it is, most every manufacturer will have hybrids for sale within 2 years, and even without additional incentives, the cost of gas alone will make most of these hybrids very popular. IF the feds would negotiate a set volume of hybrids that they would buy directly from manufacturers, then these manufacturers could make informed capital spending choices, without fear of a loss of profit. The feds could then give away these vehicles to homeowners that upgraded their homes to meet federal energy guidelines, as a direct incentive. On the backend, the feds would take cars that were 10 years or older, and recycle them. Or we could continue to fund the war in Iraq - I hate it when the feds reallocate my tax dollars to benefit foreigners! (Tongue-in-cheek)

[mmichaels]

Here's a tip....PAY FOR YOUR OWN DARNED CAR! If you need a handout, ask your parents or something. If you have a gripe, complain to the manufacturer for charging too much.

[gerrrg]

Jack K1, the Geo Metro pollutes 2 - 4 times as much greenhouse gases than the Prius (varies between different compounds), even if it has the same carbon footprint (as measured by the EPA based solely on gas mileage). Same thing goes for all those peeps that want to argue the Hummer-Prius thing...doesn't mean they pollute equally, especially if the Hummer has a longer life expectancy.

[apdicaprio]

LOL, what a joke. The Toyota Camry Hybrid shouldn't be considered fitting into being green. It was strictly a performance bump for that car. If the government should be pushing green initiatives, it should only apply to "green" cars. Which in the end, the Prius and Civic barely fit that bill. You want to be green, go buy a used civic / corolla that gets 30+mpg instead of some new battery laden green farce.

[ListeningAsFastAsICan]

Giving you money to buy a car you are going to buy anyway and that the manufacturer is making as fast as it can is probably not the best use of monies targeted to incentivizing a faster-than-market buildout of a robust alternative energy structure. When you say "just plain stupid," unfortunately you mean it's stupid because you wanted money for yourself, not because you were thinking about the best use of that money. Unfortunately, you are the problem you are complaining about.

[gerrrg]

BEP for a hybrid depends on several factors, including how much you drive, which vehicle you buy, how much you pay for gas, how much you paid at the dealership. People that quote worst-case-scenarios for hybrid BEP are looking for the quick hit points that prove their opinions to be correct, which is like lying to yourself just to prove you're right. I have a friend that has a family of 4, and their Prius gets over the standard 12,000 miles/year. For them, they're about to hit the BEP next year. For me, I only drive 5500 miles/year, so my BEP would have been 8-9 years away...so I got something else.

[raywkirk]

Agreed! I drive 25,000 business commute miles per year on the freeway. No stop/go. I get 50+ MPG in my 2005 Prius. Gas is 4.41/gal in my area (So. Cal.)
Do the math yourself. I expect that after 55K miles I'm already well ahead of the game, BEP wise.

[gerrrg]

apdicaprio, what are you smoking? The 2009 Camry Hybrid's mileage is 33/34/34 city/highway/combined, while the standard 2009 Camry is 21/31/25. That's not just a performance boost, that's an enormous mileage boost (34 mpg from 25 mpg)...so much so that it has one of the shortest BEP of the hybrids.