Tax Update Blog: Permalink

« Previous · Tax Update Blog Home · Next »

WHAT'S GOOD FOR GM IS GOOD FOR YOU!

June 25, 2008

General Motors is preparing to roll out a new electric car, the $40,000 Chevy Volt. But they want to offer it with an attractive discount: a $7,000 tax credit:

If congressional leaders agree to GM's recommendation, the Volt could have a "real" price to consumers closer to the originally reported $30,000. However, since GM is suggesting basing the tax credit not just on battery size, but also on the potential quantity of petroleum avoided, lawmakers could conceivably balk at the tax implications as more alternative fuel vehicles enter the market.

That's funny. An electric car already gets a credit based on the amount of gasoline avoided. The average federal and state gas tax combined is 47 cents per gallon; if your electric car saves you 10 gallons a week, you have a "credit" of just shy of $1,000 over four years. Apparently that just doesn't transfer enough tax money to GM.