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Welfare Wagons

1 min readBy: Scott Hodge

"Congratualations. You're about to buy a fancy new Nissan Leaf or Chevy Volt…for someone else."

Ouch. That's the lead from Holman Jenkins' column in this morning's Wall Street Journal titled "Welfare Wagons" (subscription) in which he rightfully blasts the taxpayer subsidies that these cars will enjoy.

Due out this fall, purchasers of these cars will be eligible for a $7,500 tax creditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. and another credit to buy the $2,200 charging station. (Not that I am in favor of either, but I should note that the child credit is only worth $1,000, so it would seem Congress is seven and one-half times more interested in helping automakers than working families with kids).

Neither of these cars will be profitable, reminds Jenkins. They only will help with corporate marketing and to offset the CAFÉ standards for their more profitable SUVs and trucks. "Let's concede that the Leaf and Volt will be nifty gadgets, but not unless we're going to start subsidizing Ferraris for the tiara set is it possible to imagine a more regressive taxA regressive tax is one where the average tax burden decreases with income. Low-income taxpayers pay a disproportionate share of the tax burden, while middle- and high-income taxpayers shoulder a relatively small tax burden. subsidy."

After making the point that higher fuel prices will do more to reducing oil dependence than electric cars, Jenkins concludes that "TaxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. handouts for electric vehicles are emblematic of an alarmingly childish refusal to take account of circumstances. The U.S. government is deeply in debt. In people and nations with their backs to the wall, one looks for signs of rationality. Running up more debt to subsidize electric runabouts for suburbanites is not such a sign."