SEN. ERNST: Let’s Eliminate a Tax Credit for Wealthy Coastal Elites

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With the U.S. Senate working on a bipartisan energy package last week, U.S. Senator Joni Ernst (R-IA), a member of the Senate Environment and Public Works Committee and chairman of the Senate Agriculture Subcommittee on Rural Development and Energy, is teaming up with U.S. Senator Mike Braun (R-IN) to eliminate the Electric Vehicle (EV) tax credit for wealthy families and vehicles that cost over $45,000.

“Iowa taxpayers shouldn’t be footing the bill for millionaires to get a discount on luxury cars. That’s why I’ve been working hard to get the EV tax credit off the books,” said Senator Ernst. “With its history of systemic problems and fraud, this program needs to be scrutinized, which is why I’ve urged the IRS to take a closer look at its issues. I’m building on that effort by joining these two additional measures that will eliminate this incentive for wealthy coastal elites.”

“As co-founder of the Senate Climate Solutions Caucus, I know we need to promote vehicles that reduce our carbon footprint, but it doesn’t need to be in the form of tax breaks for the wealthy and their luxury vehicles,” said Senator Braun. “These two bills should be a slam-dunk for legislators who want to protect the environment while limiting tax breaks for the super wealthy.”

The Ending the Electric Vehicle Entitlement for the Wealthy Act will eliminate the EV tax credit for joint tax returns over $326,600 and individual returns over $163,300. The second measure, the Affordable Electric Vehicle Credit Act of 2020, will limit the EV tax credit for vehicles costing less than $45,000. Under this provision the following vehicles would still eligible for the EV tax credit: BMW i3, Chevrolet Bolt EV, Honda Clarity Electric, Hyundai Ioniq Electric, Hyundai Kona Electric, Kia Niro EV, Mini Cooper SE, Nissan Leaf, Nissan Leaf Plus, Tesla Model 3, Tesla Model Y, and the Volkswagen E-Golf. 

According to the U.S. Department of Energy, on average, EV owners also own two other cars. Further, 42% of EV owners earn more than $150,000 annually. Between Fiscal Year 2011 and Fiscal Year 2017, this tax credit totaled $2.2 billion in lost revenue. With the increase in sales of EVs, the Joint Committee on Taxation estimates that the federal government will spend $7.5 billion on the EV tax credit from 2018 and 2022. Yet, in 2016, 78% of the credits were claimed by filers with adjusted gross income (AGI) of $100,000 or more. About 7% of credits claimed, and 8% of the total amount of credits, were on returns where the taxpayer’s AGI exceeded $1 million.

Senator Ernst has been an outspoken advocate for getting rid of the EV tax credit. She’s a cosponsor of the Fairness for Every Driver Act, which would repeal the EV tax credit, and urged the IRS regarding a recent Office of Inspector General report that found widespread improper claims of the EV tax credit.

Author: Press Release