Republicans propose taxing EVs at 10x the rate gas cars pay, increasing deficit

Oil-backed House republicans have proposed putting a $200/year federal registration tax on EVs, with the false rationale that it will help to close a supposed budget shortfall that has in fact been caused by Congress’ refusal to raise the federal gas tax since 1993.

The proposal was announced by the House Committee on Transportation and Infrastructure, chaired by Sam Graves (R-MO), who received $163,300 in bribes from the oil & gas industry in the last campaign cycle.

It proposes a massive tax hike on the nation’s electric vehicles, not just increasing taxes on those cars far beyond what is reasonable by any measure, but also adding yet another abusive tax on EVs that is yet again higher than the tax that polluting, damaging gas vehicles have to pay.

We’ve already seen these ridiculous laws pass state by state, and every one we’ve seen has been abusive or overpriced in some way.

In many states, EVs not only have to pay a registration tax far in excess of the amount a similarly-efficient gas vehicle would have to pay, they also have to pay taxes on the energy going into that EV.

Some are particularly abusive, like in Kentucky, where EVs are charged two taxes where gas cars only pay one (or, in some cases where utility services are taxed, three separate taxes). But all of them that we’ve seen so far are one-size-fits-all measures which do not account for road damage, do not account for vehicle efficiency, and do little to nothing to fill any budget shortfalls.

Rather than going for fairness and actually calculating the amount of road use that any given EV does, and attempting to charge a fair fee based on that (as one might rightly do with a weight/mileage fee, applied to all vehicles, as Washington state kind of tried to do), these taxes instead just add a large penalty to EV drivers in order to disincentivize EV ownership. No wonder, given that the push for them started with the Koch brothers, who became billionaires by poisoning you with their oil and gas products and have then spent those proceeds lobbying to ensure that they continue to be able to poison you further.

But now House republicans want to add yet another tax, meaning that EVs nationwide would have to pay not only taxes on the energy that goes into the car (at least in regions where electricity is taxed), but also both state and federal registration taxes. And the number associated with that tax is just as insane as you might expect out of this current Congress.

The $200/year tax hike is equivalent to the federal gas taxes that would be paid on 1,087 gallons of gasoline. With most EVs being quite efficient and achieving something on the order of 120MPGe, the amount of energy from those 1,087 gallons of gasoline would be enough to pilot those EVs over a hundred thousand miles in a year. Quite a bit more than the average driver. You may claim that efficiency isn’t a fair way to figure these taxes, but that’s how they’re figured on gas cars, entirely, so if it’s fair for them then why isn’t it fair for EVs?

Even if we were to give the EV a handicap and pretend that it’s the same efficiency as the average gas-powered vehicle (it’s not), a 24mpg vehicle would have to drive over 26,000 miles in order to pay that much in gas tax, which, again, is much higher than the average driver.

But if we claim it only has to do with road damage caused, and not with efficiency (despite that that’s how the gas tax is levied), then we must look at what actually causes road damage: big trucks. A heavy duty tractor-trailer loaded to 80,000lbs does 9,600x as much road damage as a 4,000lb automobile, and these trucks tend to run higher average mileage.

If a truck does 10,000x as much damage and runs 5x as many miles as the average EV, then a road usage fee of $10 million a year must be fair, right? And if you balk at that number, then you must also balk at a $200/year registration fee. (Not to mention, in most states, gas taxes don’t pay for a majority of road costs anyway).

So regardless of the method we go about figuring fairness, this tax is too high. Unsurprising, from a bought-and-paid oil stooge like Graves.

Graves’ release goes on to state the sort of nonsense you might expect from a recipient of bribes from the oil industry, claiming that the purpose of this tax is to make up for a budget shortfall which he blames on electric vehicles (nevermind that it started to come about well before EVs showed up on the US’ roads). In his desperate quest for justifications for his massive tax hike, though, he fails to mention that the federal gas tax has not been raised since 1993, when it was set at the 18.4 cents that it remains at today.

As costs of just about everything have gone up since then, strangely, the gas tax hasn’t increased – if it kept up with inflation, it would be around 40 cents today. So that’s 32 years worth of free ride that gas cars have gotten on roads, with their taxes gradually decreasing relative to the inflated dollar.

I wonder if that might contribute to any sort of shortfall, and not the roughly 1.4% of the US vehicle fleet that runs on electricity?

But, hey, I guess if we need to raise funds, we can surely milk a lot more out of those ~4 million EVs (times $200/year, that’s less than a billion dollars) than we can out of the ~290 million gas cars on the road (a single penny increase in the federal gas tax would increase federal revenue by twice the amount the proposed EV tax will – and if it was indexed to the level of inflation, it would raise more like $30 billion this year).

Add another failure of simple math to this proposal, but tack on a mark of cowardice for targeting a smaller group who won’t complain as much, and who won’t rock the boat of the industry responsible for your political bribes, Mr. Graves.

The document goes on to betray its lack of interest in good governance or basic math and to show that it is motivated by partisanship and an attempt to buoy gasoline vehicles, not budgetary concerns.

For example, it talks about the “wasteful” spending of President Biden’s Inflation Reduction Act (IRA). But here’s the rub: the IRA was actually revenue-positive, reducing the federal government deficit by $90 billion over 10 years. That differs from the current republican House budget, which Graves supports, and which will increase the deficit by $6 trillion in a decade.

So much for caring about the deficit, but math never got in the way of good propaganda from Graves’ oil industry benefactors.

But, well, there’s one thing I neglected to discuss. Graves’ proposal also does propose a registration fee on gas vehicles… so it’s being fair, right?

Well, not quite, because the proposed tax on gas vehicles would be $20 per year, compared to the ten times higher EV tax of $200 per year, despite that both vehicles have similar effect on roads. The gas vehicle registration fee would only start in 2031, seemingly giving gas vehicles a free ride until then… but in fact the $20 fee would represent a decrease in total taxes paid by gas cars, because the suggestion is that the $20 fee should replace the gas tax, which Graves refers to as “broken” (perhaps because it hasn’t been raised in over 30 years, hmm?).

So it turns out we didn’t even have to do that math above about how these EV fees are unfair – because Graves is telling us, right out, that he wants to tax EVs at ten times the rate of gas cars.

Note that $20/yr would represent about a 4-5x decrease in tax paid per gas vehicle, compared to current levels, which means that government revenue would drop by a similar amount, while costs for construction are likely to continue to go up. This means that the deficits related to spending to fix the US’ broken infrastructure would increase drastically – but then again, we already know from their budget proposal that republicans love deficits.

What is perhaps most surprising is that one of the top supporters of the republican party that has proposed this massive tax hike on electric vehicles and giveaway to gas cars is Elon Musk, CEO of Tesla, the largest EV company in America.

Musk gave, and continues to give, hundreds of millions of dollars of his own money, most of which came from his company that sells electric vehicles, to the party that wants to put disproportionately high taxes on those EVs. This does not seem particularly productive to Tesla’s mission, but it’s not the first bad business decision we’ve seen from him lately as he seems to have forgotten about that mission.

If Graves, or the republicans, or anyone wanted to actually solve this problem, the actual fairest solution remains a mileage tax on all vehicles, scaling significantly based on the weight of the vehicle involved (at least partially recognizing the fourth power law that makes heavier vehicles worse on roads); and a separate fee to account for the unpriced externalities of pollution created by vehicles, relative to the amount that each vehicle creates and the costs they foist on the populace – as proposed in the past by old guard republican leadership, along with basically every economist and Elon Musk himself.

But this proposal, clearly, by any metric, does not move the needle in the right direction – well, unless you’re one of those oil companies that gave Graves the paltry $163k in bribes which got us here. Democracy!

Update: Republicans have dropped the $20 gas car fee from the proposal, and raised the EV tax to $250. So now they want to tax EVs infinitely more than gas cars, and combined, these changes would result in an additional ~$5 billion yearly deficit accounting for the current vehicle fleet. The republican party are literal cartoons. These are not serious people.

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