Unplug Democrats' Tesla Tax on the Poor
At his inauguration address earlier this year, President Joe Biden called on Americans of all stripes to come together in the struggle against the pandemic, climate change, and social injustice. Little more than two months later, however, it seems that House Democrats on the Energy and Commerce Committee have all but forgotten this message of solidarity. As America continues to weather the pandemic, the recently released CLEAN Future Act will put struggling communities on the hook for the rollout of electric vehicle charging stations. This reverse Robin Hood ‘Tesla tax’ would make the poorest fund the luxuries of the wealthiest.
The Climate Leadership and Environmental Action for our Nation’s (CLEAN) Future Act sets the ambitious goals of cutting greenhouse emissions to 50% of the 2005 levels by 2030, and net zero by 2050. To meet these targets, the bill spills over almost 1,000 pages of energy, transportation, and environmental regulations, grants, and mandates.
Hidden deep in the bill are a raft of provisions to expand the roll-out of electric vehicle (EV) charging stations. Section 435, for example, will allow utilities to bill energy ratepayers to recover the costs of expanding EV charging networks. Similarly, section 205 enables the EPA administrator to make grants from a Carbon Mitigation Fund to install fast-charging electric vehicle infrastructure along urban and rural highways and public roads.
The problem is that all taxpayers and electricity consumers will fund the expansion of EV charging infrastructure, but only the wealthiest will enjoy it. EVs are not known to be cheap, with the average price of a vehicle sitting somewhere around $55,600.
The luxury status of EVs is also evident in the tax returns of those who claim the federal EV tax credit. According to the Congressional Research Service, 17% of taxpayers had an adjusted gross income of $100,000 or more in 2016. But 78% of those claiming the EV tax credit were in this higher income echelon.
Despite plundering the poor, the CLEAN Future Act tries to cover its tracks through thinly veiled lip service to social justice. Section 440B provides grants of up to 80% of the cost of an EV charging project in underserved or disadvantaged communities. While that might sound generous on paper, it is divorced from the reality of working-class America.
According to the Bureau of Labor Statistics, the annual mean wage of workers in all occupations is below the average cost of an EV. For underserved communities, both urban and rural, these green charging stations are white elephants. For wealthy road-trippers, however, they’ll offer a convenient place to charge up on their way through.
A close reading of the CLEAN Future Act should not disparage the promise and potential of EVs. Tesla is a wildly successful American company, built on the back of ingenuity and entrepreneurship. Given that climate action is increasingly a bipartisan issue, helping more consumers buy the car that they want will no doubt spur the uptake of EVs. With the right policy mix, the federal government can support consumer choice while limiting the burden on low-income consumers.
Nonetheless, forcing lower income taxpayers and energy ratepayers to fund the rollout of EV charging stations constitutes a Tesla tax on the less-wealthy. When Marie Antoinette was told that the poor could not afford bread, she reportedly said to “let them eat cake.” For Americans who are struggling in the wake of the pandemic, House Energy and Commerce Committee Chairman Frank Pallone has effectively declared to let them charge their Teslas.
Oliver McPherson-Smith writes for the American Consumer Institute, a nonprofit educational and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org or follow us on Twitter @ConsumerPal