Rich People Benefit More From Tax Credits (Duh)
September 2nd, 2015 by Zachary Shahan
I’ve always found it a little fucked up that US federal incentives for solar energy and electric cars are tax credits. I’m sure there are some arguments for this, but a simple cash rebate (like California offers) would be much more useful for the majority of people...
A working paper by a team at the Energy Institute at Haas, University of California, Berkeley, has found that 60% of the $18 billion in US federal income clean energy tax credits issued between 2006 and 2012—e.g., for weatherizing homes, installing solar panels, and buying hybrid and electric vehicles—went to the top income quintile in the US (above $200,000 per year),” Green Car Congress writes. “The bottom three quintiles (up to $75,000 per year) received about 10%.”Seriously, what is so hard about providing the middle class and poor with better incentives to go green? In actuality, these would be the populations that would most benefit from fuel savings, electricity savings, and cleaner cars. Alas, Congress is not made of the middle class, let alone the poor. For the rich, by the rich, of the rich.
Given that this is a transportation site, I should emphasize the transportation-related findings, and they are actually the worst. “The most extreme case, Severin Borenstein and Lucas Davis found through their examination of tax return data from the IRS, is the program aimed at electric vehicles—the top income quintile received about 90% of all these credits. As a result of the work, Borenstein and Davis conclude that tax credits are likely to be much less attractive on distributional grounds than market mechanisms to reduce GHGs.”...
The PEDVC is much more concentrated than the other categories of credits. The bottom 80% of filers receive a little more than 10% of all credits, and the bottom 90% of filers receive only about 40% of all credits....
The authors of the report, Borenstein and Davis, argued in favor of a more equitable carbon tax.
It would seem difficult, therefore, to prefer tax credits over a carbon tax on distributional grounds. There may well be political considerations that continue to favor tax credits, but this approach comes at real cost, both in terms of efficiency and equity.
Well, yes, a carbon tax has been out of the question thanks to too many illogical and hostile Republican congresspeople opposing action to save human civilization. On top of that, they aren’t going to concern themselves much about a more equitable approach, since they typically aren’t fond of fighting for the less advantaged anyway. So, for the moment, the best we have are tax credits...
