General Motors’ recent announcement to slash its workforce by 15 percent has drawn bipartisan backlash, including from President Trump, who threatened to do away with a tax credit for electric vehicles that benefits GM. While it shouldn’t require a notice that the auto industry doesn’t need these subsidies, the president is right to question the need for such a credit. Even with last year’s passage of pro-growth, comprehensive tax reform, problems still exist with the tax code. To this day, far too many special interest carve-outs, such as the Electric Vehicle Tax Credit, remain.
The EVTC was established in 2005 as a way to encourage consumers to switch to more energy-efficient transportation alternatives. Now, it’s an unneeded tax break for the wealthiest Americans that distorts the automobile market. Depending on the specifications of the car, consumers are eligible for up to a $7,500 tax credit to help offset the high price of their purchase. Now that demand for electric vehicles has outstripped supply, the federal government no longer needs to be incentivizing these purchases.
