Thanks for the Solar Panels, Electric Car and free Home Insulation Package and that Free Home Furnace in the basement; One tax policy that is ripe for fixing is the Solar
Investment Tax Credit (ITC). The ITC currently allows homeowners and businesses
to deduct a portion of the cost of installation of solar panels until 2021. In
2015, Congress approved this tax cut in a deal with the Obama White House. What
bothers me is that the implementation of the ITC means that Americans who do
not choose to put solar panels on their rooftops have to subsidize those that
do. Also, it turns out that taxpayers are also subsidizing some of the
wealthiest people on the planet.
Consider Elon Musk, the owner of SolarCity – which recently
merged into his other company, Tesla – is the largest provider of residential
solar panels in the nation. Musk is the 87th richest man in the world and
someone worth admiring for his financial successes that have created thousands
of jobs. However, I am not supportive of tax policies like the ITC that put
more money in the pockets of billionaires.
Another government incentive that Elon Musk benefits from is
the Zero Emissions Vehicle (ZEV) tax credit. This policy allows people who
purchase electronic/plug in vehicles to deduct $7,500 from their federal taxes.
This credit phases out after any manufacturer sells 20,000 qualified vehicles.
The only automaker even coming close to this 20,000 threshold is Tesla and Elon
Musk.
Now, Musk has publicly said he does not support the ZEV,
stating on a recent earnings call: “the reality actually is that, if electric
vehicle incentives went away tomorrow, Tesla’s competitive position would
improve.” If Musk can’t have the tax credit much longer, he doesn’t want his
competitors to have it either. So Musk uses the tax credit to get a leg up and
then wants to eliminate it to punish his competitors when he can’t get it
anymore? Oddly enough, the only profitable quarter Tesla has seen in a long
time was selling $139 million in pollution tax credits to other automakers.
To me, the lesson of Elon Musk – who, according to a report
by the Los Angeles Times in May of 2015, has been the beneficiary of almost $5
billion dollars in government subsidies – is that these green tax credits allow
businesses to subvert the free-market to their own advantage. I don’t blame
Musk, nor is this piece meant to be a critique of him. The business world is a
tough place, and competitors need to seek out any advantage they can get. I
just don’t think the American tax code should be a tool used by corporate
titans to gain leverage or advantage over each other. Success should be
determined by the quality and price of their products and services in the free
market.
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