Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Tesla Motors - U.S. Congress Has Created a New Tax Credit…at Your Expense

Politics / US Auto's Apr 14, 2016 - 04:34 PM GMT

By: Rodney_Johnson

Politics This year, tax day arrives soon after Tesla Motors unveiled the affordable Model 3.

Well, maybe affordable isn’t the right word. With a base price of $35,000, it’s more expensive than the entry level Mercedes, but it’s also less than half the cost of the vaunted Tesla Model S, which starts at $76,000.


The reason I bring up Tesla near tax day is because every U.S. Tesla buyer can claim a $7,500 tax credit, which will cut the cost of the new Model 3 by more than 20%.

That’s a deal, but it might not be around by the time the Model 3 is ready for delivery.
Congress created this tax credit in 2009 under the Plug-In Electric Drive Vehicle Credit Act as an incentive to get Americans to buy electric cars. The credit applies to the first 200,000 buyers of an electric car from each car manufacturer. Once an automaker reaches that milestone, the credit phases out.

Tesla has more than 100,000 cars on the road, and just reported that it sold 14,820 cars in the first quarter. By its own estimates, the company will reach 200,000 units sold in early 2018, just after the Model 3 goes on sale. While every buyer of an expensive Model S over the past several years got the tax break, most buyers of the modest Model 3 will be out of luck… unless something changes.
And I’m betting it will.

Almost since the federal tax code was written, Congress has used it as both a carrot and a stick. The goal is to prod Americans to make different choices with their cash, depending on what our elected officials deem good or bad.

In the eyes of Congress, clearly renters freeload on the economy while homeowners are pillars of their communities.

But not all homeowners fit this category, just those that have outstanding mortgages. If this weren’t the case, then either everyone would get some sort of tax break for maintaining a household, or the mortgage interest deduction would not exist.

Child bearing is in the same category. It must be a “better” decision to have kids, which is why the government provides a child tax credit… as well as a child care credit… and an education credit.

If you rent and have no children, then you might think that Congress is out to get you. Unless of course you bought a Tesla, in which case the tax credit will provide some solace. You can also take heart if you’re single, since Congress, which wants people to have children, penalizes those who are married. Go figure.

There are tons of other examples, including everything from solar panels to charitable deductions. And I’ve not even touched on investing do’s and don’ts (buy depleting assets, but don’t sell anything that appreciates, and stay away from dividends!), and how we drive business decisions from health care to R&D.

But all of this comes down to the same point. Instead of simply assessing the taxes required to fund the government for a given level of service, our Congress goes the extra mile.

They tell us not only what to pay, but also try to sway our financial decisions along the way. They want us to use more credit, spend more money on specific items, and have more kids. If we don’t do their bidding, then we’re forced to subsidize others that do.
This affects some more than others. If you’re married, rent your home, invest in corporate bonds, have no children at home, are in the top 20% of earners by income, and haven’t bought a plug-in vehicle since 2009, then the rest of the nation owes you a big, fat “Thank you!”

While I agree that many, but not all, of the financial decisions that the government tries to promote are good for the nation, the idea of taking money from some people and giving it to others on the basis of spending seems very un-American.

Where’s the freedom to make our own decisions, particularly with our hard-earned money? Why does a person who can buy an $80,000 electric vehicle deserve to be financially supported by the rest of us?

If electric cars are a good idea, shouldn’t they stand on their own?

The same goes for a person or couple who can buy a $500,000 house, or even a $50,000 house. No matter how noble or questionable the financial outlay, taking money from some citizens to support others on the basis of spending feels like paternalism, not freedom.

As we go through this election year, it would be great to hear our candidates talk about revising the tax code, making it simpler to understand and follow by stripping out the thousands of regulations regarding what counts as income, what can be deducted, and what qualifies for credit.

But I’m not holding my breath. I don’t think our next administration will do anything to ease our tax compliance burden, but they will do something.
Most likely, they will extend the tax credit on plug-in vehicles, specifically for Tesla.

Government officials will call it a smashing success, noting that 200,000 of their vehicles are already on the road. Nowhere will they mention that this very small group of buyers received a financial payoff at the expense of all the other American taxpayers, who either didn’t want or couldn’t afford such a vehicle.

Follow me on Twitter ;@RJHSDent

By Rodney Johnson, Senior Editor of Economy & Markets

http://economyandmarkets.com

Copyright © 2016 Rodney Johnson - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Rodney Johnson Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in