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Tax credit expansion sought by Tesla, other EV players fail to make it a tax break deal for lawmakers

By on April 19, 2021 0

Tesla, General Motors and others in the electric vehicle industry failed in the race for a year-end congressional tax package and failed to secure an expansion for credit.

Following the usual industry lobbying for last-minute legislation to renew tax cuts and expired subsidies, lawmakers agreed on Monday evening on a package that does not include extension for electric vehicles (EV).

The potential expansion of EV credit had been included by House Democrats in a GREEN law proposal which aimed to offer a wide range of energy-related tax incentives. This would have increased the level of sales at which credit begins to be phased out.

The current $ 7,500 electric vehicle tax credit, which allows taxpayers to deduct part of the cost of purchasing an electric car, gradually disappears once an automaker reaches 200,000 cumulative sales of electric vehicles, and Tesla TSLA,
+ 4.40%
and GM GM,
have already sold more than 200,000 electric vehicles. If the extension had been given the green light, there would have been a credit of $ 7,000 until a manufacturer reaches 600,000 vehicles sold.

The extension has been a problem in Washington throughout 2019, with some lawmakers supporting it in the spring as they rolled out a bipartisan Driving America Forward Act, which was later incorporated into the GREEN Act.

But in an example of opposition to the electric vehicle tax credit, Republican Senator John Barrasso of Wyoming had argued this year that it is “it’s time to remove the plugOn the subsidy for electric vehicle buyers as he rolled out a “fairness law for every driver.” President Donald Trump also weighed in, and he helped cancel a credit extension, a Bloomberg News Report mentionned.

The Driving America Forward Act was the bill Tesla lobbied the most in 2019, according to a OpenSecrets.org analysis of disclosures. It was also a priority for GM.

Don’t miss:Tesla’s ‘bull case’ is $ 500 at Morgan Stanley

Before the electric vehicle tax credit expansion failed in the year-end package that includes many so-called “tax extenders,” some supporters seemed optimistic about its chances. .

“With broad bipartisan support, we believe the electric vehicle tax credit extension is uniquely positioned to be enacted,” EV Drive Coalition’s Mike Carr said in an email to MarketWatch last week. . Group members range from Tesla, GM and Nissan NSANY,
+ 1.53%
to the electrical equipment giant ABB ABB,
+ 0.30%
, as well as from Nature Conservancy to charging station providers Volta and ChargePoint.

Related:Tesla Model 3 named ‘best electric car’ by Edmunds

And see:This rising stock looks like a promising bet on electric cars – and it’s not Tesla

On the other hand, some analysts have been pessimistic about the prospects of an extension of the EV tax credit. “There’s a chance,” but it’s “unlikely” and just “theoretical,” said James Lucier, analyst and managing director at Capital Alpha Partners, in an email to MarketWatch ahead of recent negotiations between lawmakers. Lucier had compared the situation to a scene in the movie “Dumb and Dumber”, when Jim Carrey’s character is excited by a chance “in a million” and says, “So you tell me there is a chance.”

The tax breaks that were part of the year-end program include a credit that benefits railways, incentives for biodiesel producers and tax relief for brewers and distillers, a Wall Street Journal Report mentionned.

“We are delighted that lawmakers have included a one-year extension of the federal excise tax reduction for distillers in the year-end legislative package,” the United States Distilled Spirits Council said Tuesday. in a press release. “While this is not a deal yet, it is a significant relief for artisanal stills across the country who were facing a 400% tax hike as of January 1. We will continue to urge Congress to do the right thing, support small business and pass critical legislation. “

See:Here are some of the business tax credits Congress could approve by the end of the year

Republican and Democratic lawmakers have shown interest in some year-end deals, even as an impeachment drive against Trump intensifies and divides Washington. On Thursday, they reached agreement in principle on a dozen spending bills, in a deal that likely avoids a government shutdown.

Related:Spending agreement to repeal certain “ Obamacare ” taxes and increase the age of purchasing tobacco to 21

This is an updated version of an article that was first published on December 13, 2019.

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