Tesla CEO Elon MuskTesla Motors, which is already heavily dependent on tax subsidies to sell its luxury electric cars, has managed to hit another lucrative taxpayer vein with its Model X electric SUV.
That car, which will retail at more than $100,000, is eligible for a $25,000 tax deduction, according to the Los Angeles Times.
Yes, you read that right.
The tax break, offered to small-business owners, comes from President Obama’s stimulus program. It was supposed to encourage small companies to spend more on equipment like tractors and trucks, or other vehicles weighing more than 6,000 pounds. Which, conveniently enough, the Model X does.
So let’s say you’re eligible for the $25,000 tax deduction and you’re in the 39.6% tax bracket. You’d save $9,900 in taxes. Combine that with the $7,500 federal tax credit for buying an electric car, plus state-level credits (the one in California is $2,500), and your total tax break hits $19,900.
That $100,000 car ends up costing you only $80,100, with taxpayers picking up the rest.
This is not a far fetched scenario. As the Times explains, Tesla buyers are overwhelmingly wealthy, with median incomes of $280,000 — which is more than five times the national median.
Tesla isn’t the only car maker benefitting from these lavish tax breaks. Overall, the federal government handed out nearly $1 billion in tax credits to plug-in electric and hybrid car buyers from 2006 to 2012, according to researchers at the University of California, Berkeley. In 2012 alone, these credits added up to $159 million.
And, as with Tesla, the credits overwhelmingly benefit the well-to-do. The Berkeley researchers found that 89% of the plug-in tax credits were claimed by people making $75,000 or more; those with incomes above $200,000 got more than a third — which makes this one of the most regressive tax credits on the books.
When he was running for office in 2008, President Obama talked about how he wanted to “spread the wealth around.”
It’s unlikely anyone could have imagined that what he meant was taking hard-earned tax dollars from the middle class and handing it over to rich luxury-car buyers.
