In 2022, Democrats rammed through what they misleadingly called the Inflation Reduction Act. The name was deceptive then, and the results are unmistakable now: It didn’t reduce inflation. What it has accomplished is pouring hundreds of billions of taxpayer dollars into “Green New Deal” subsidies – the most important of which are tax breaks for electric vehicles (EV), which have disproportionately benefited the wealthy.
At the time, I stood on the Senate floor and asked: Why should working Americans struggling with high prices be forced to subsidize the purchase of luxury cars for the wealthy? Nearly every Democrat in the Senate voted to keep these handouts alive. Now, more than four years later, the data proves I was right.
The National Bureau of Economic Research found that seven out of 10 recipients of EV tax credits would have purchased an electric car anyway. In other words, taxpayers were footing the bill for the decisions affluent households were already starting to make. That’s not an incentive, that’s a windfall.
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And who reaped that windfall? The richest Americans. A National Bureau of Economic Research study shows that before the so-called Inflation Reduction Act, the top 5% of earners claimed half of all EV tax credits, while the bottom 60% of earners received less than 3%. Democrats claim they solved this by adding income caps, but they set the cap at $300,000 for joint filers. Since when is $300,000 considered middle class? In what world should taxpayers buy $80,000 SUVs for families making three times the median household income?
Electric cars are parked at a charging station in Sacramento, California, Wednesday, April 13, 2022. (AP Photo/Rich Pedroncelli, file)
The environmental case is not much stronger. Yes, electric cars produce fewer emissions than gas-powered cars. But the Congressional Research Service highlights research showing that the credits largely crowd out sales of other efficient vehicles such as hybrids. If you take that replacement into account, the supposed climate benefits are overestimated by almost 40%. Simply put, these credits are not nearly as “green” as Democrats claim.
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Meanwhile, the price tag was enormous. That’s why I’m glad we repealed these wasteful tax credits in the July reconciliation bill. The Joint Committee on Taxation estimates this will save taxpayers $190 billion over the next decade. Republicans are saving taxpayers from this costly policy that would never achieve the Democrats’ goal of 50% EV sales by 2030.
In what world should taxpayers buy $80,000 SUVs for families making three times the median household income?
The verdict is clear: EV tax credits are inefficient, inequitable and irresponsible. They don’t meaningfully change consumer behavior, they don’t deliver the environmental benefits promised, and they drain taxpayer dollars into the pockets of the wealthy. If Democrats were serious about helping working families—instead of sending a virtue signal on climate change—they would support policies that deliver real returns on investments.
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A good place to start would be addressing the dwindling Highway Trust Fund (HTF), which is expected to fail in 2028. While gasoline car drivers pay into the HTF through the federal gas tax, electric cars currently don’t contribute at all – despite their heavier batteries causing more wear and tear on our roads and bridges. That means higher maintenance costs – and once again, working Americans have to foot the bill.
That’s why I introduced the Fair SHARE Act, which would require electric car owners to contribute to this fund. I encourage my Democratic colleagues to co-sponsor it and work with me to include an EV fee in the upcoming Surface Transportation Reauthorization Act. That would be a fairer and smarter policy — one that actually serves working families instead of subsidizing the wealthy.
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