Senator John Barrasso Parrots Koch Talking Points to Kill Electric Car Tax
February 5, 2019  Ben Jervey

[images  Senator John Barrasso at CPAC. Credit: Gage Skidmore, CC BY-SA 2.0

Gas pump handle  Credit: Jess Lundgren, CC BY 2.0
Chevy Bolt electric car
A brand new Chevy Bolt is retailed around $36,000. Credit: Courtesy of AAA

Charles Koch at a conference in Aspen in 2016. Credit: Fortune Brainstorm

This morning, Wyoming Senator John Barrasso published an op-ed in Fox News
arguing for an end to the federal electric vehicle (EV) tax credit and a new
“annual highway user fee for alternative-fuel vehicles.”

Barrasso, who cashed more money from Koch Industries in the 2018 election
cycle than all but two other senators, and has taken in $45,400 from Koch
Industries from 2013 to 2018, introduced a bill last October that would
immediately amend the tax code to terminate the EV tax credit and calculate
a new annual user fee for drivers of cars that aren't powered by gasoline or
diesel. A similar bill was introduced at the same time in the House by Ways
and Means Chairman Kevin Brady of Texas, a key Koch ally.

Besides the Trump administration's proposed rollback of fuel efficiency
standards — which the Koch network and other oil and gas interests have been
aggressively lobbying for — Barrasso's proposal reflects a top policy
priority of the Koch network, one that would greatly benefit oil refiners
and gasoline marketers who are desperate to keep American drivers coming
back to gas stations.

Senator Barrasso's Op-Ed Echoes Koch Network Talking Points

If the Republican Senator's op-ed sounds familiar, it's probably because
Barrasso repeats a number of talking points that Koch network
representatives have been honing over the past year.

For instance, Barrasso writes: “Every time one of these cars sells, the U.S.
taxpayer must help pay for it.”

Within just the past two months, we've seen some slight variation on this
line in a number of opinion pieces and commentaries, all penned by
beneficiaries of Koch cash. In December, Jonathan Lesser of the Manhattan
Institute (which has received more than $2.6 million from Koch foundations)
tried to paint the EV tax credit as “inequitable” in Investors Business

A couple days later, George Landrith, president of Frontiers of Freedom (at
least $335,000 from Koch foundations) and the Energy Equality Coalition,
argued the same in The Daily Caller.

Just two weeks ago, Ross Marchand of the Taxpayers Protection Alliance (at
least $1.1 million from Koch groups) bashed the “EV tax credit gravy train”
and then a couple days later, Drew Johnson of the National Center for Public
Policy Research (at least $1 million from Donors Trust and Donors Capital
Fund) asked readers of the Austin American Statesmen to “Imagine taxing
middle-class families to help rich folks buy luxury cars.”

What the Koch EV Attacks Leave Out

All of these commentators fail to mention a few crucial and relevant facts,
besides their immediate ties to funding from the petrochemical billionaire
Koch empire.

First, while attempting to portray the EV tax credit as a “handout to the
rich,” the Koch-funded advocates harp on one particular figure, as Johnson
puts it: “Almost 80 percent of EV federal consumer tax credits go to
households making more than $100,000 a year.”

This is deceptive and inaccurate framing that has been widely used in
anti-EV arguments. To support the point, some authors cite a study by the
Congressional Research Service (though most make the claim without any
reference), which describes how in 2016, 57,066 individual taxpayers claimed
$375 million in plug-in vehicle tax credits. Of these 57,066, 78 percent
have an adjusted gross income of $100,000 or more.

However, as Wade Malone explains in InsideEVs, 158,614 plug-in vehicles were
sold in 2016. What about the other 100,000 or so EVs? They were leased.

Malone explains:

    “In this situation, leasing companies claim the $7,500 tax credit. The
tax credit is then almost always applied directly or indirectly to reduce
monthly lease payments. As a result, lease rates are typically in the same
ballpark (or lower) than equivalent ICE [internal combustion engine] vehicle

Others cite older data from 2014 IRS filings that was promoted in a recent
Pacific Research Institute study, which also ignores the significant role
leases play in the EV market. Through 2017, the vast majority of EVs were
leased — a full 80 percent of non-Tesla EVs and still well more than half of
all EVs including Tesla, according to Bloomberg New Energy Finance.

As Malone explains, these leases have a trickle down effect of making EVs
available to all economic classes.

    “This is appealing to many middle class buyers for a variety of reasons.
The buyer is able to see an immediate reduction in their monthly payment
rather than waiting until tax filing season to receive a full or partial tax
credit. Secondly, EV tech is rapidly improving. Leasing allows buyers to
drive for 3 or 4 years, then move on to the next generation of electrics.

    When the vehicle is turned in at the end of a lease, the car hits the
used market at a reduced price. Because a used electric car is no longer
eligible for the $7,500 tax credit, dealers price it factoring in the full
credit. Otherwise, purchasing new would be more cost effective over used.
Because of this, middle class and lower middle class buyers can affordably
finance a used EV or PHEV [plug-in electric vehicle]. It is not simply the
wealthy who benefit.”

While falsely claiming that 80 percent of all EV credits benefit households
that earn more than $100,000, these op-eds ignore the fact that the average
income of households that purchase any new vehicle — plug-in or gasoline
powered — is even higher than that. According to a report by the National
Center for Sustainable Transportation, the average household income for new
car buyers was $119,400 in 2012.

Finally, the cost of the EV tax credit is a tiny fraction of the lost tax
revenue that results from permanent tax breaks to the oil and gas industry.
In his 2018 study for the Manhattan Institute, Lesser argues that the EV tax
credit is costing the U.S. treasury hundreds of millions. To be precise, in
2017, this total was $670 million. However, according to the treasury's own
figures, oil and gas subsidies and tax credits cost $4.7 billion annually.

Or, if we repealed just nine tax breaks commonly used by oil and gas
companies, as the Center for American Progress has calculated, the U.S.
Treasury would save an average of $3.7 billion every year.

In his op-ed, Marchand wrote, “It's tough to decide which is worse: a
subsidized company that can't survive without government largesse or a
well-off successful business that doesn’t need taxpayers' help but gets it
anyway.” Yet, none of the self-described free market advocates are arguing
to end the billions handed out to the very “well-off successful” oil and gas

To summarize, EV tax credits benefit all income levels, especially when
factoring in leases and secondary sales markets, and the entire EV tax
credit program costs the U.S. Treasury a lot less than oil and gas tax

Senator Barrasso and Colleagues Echo Faulty Koch Claims

Promoting his “Fairness for Every Driver Act” in Fox News, Barrasso claims
that the EV tax credit “disproportionately subsidizes wealthy car buyers.”
He argues, without citation, that “eight out of 10 electric-car tax credits
go to households earning at least $100,000.”

When Barrasso introduced the bill, the Senate Committee on Environment and
Public Works, which he chairs, released a press release citing estimates
from the Manhattan Institute that axing the tax credit would save $20
billion in taxpayer dollars over the next decade. Even if this estimate is
true, the savings would be less than half of those achieved if the oil and
gas industry's permanent tax breaks were repealed.

The Manhattan Institute, which has received more than $2.6 million from Koch
foundations, argued aggressively in 2011 for the preservation of the oil and
gas tax breaks.

If Senator Barrasso's bill were to move, it would have to clear the Senate
Finance Committee and a comparable tax package would need to pass the House
Ways and Means Committee. As Barrasso is no doubt well aware, the Koch
network has already invested in those committees. Elliott Negin at the Union
of Concerned Scientists noted, “Since 2013, Koch Industries has given
$253,600 to 11 of the 14 Republicans on the Senate committee and $374,000 to
21 of the 24 Republicans on the House committee, including Chairman Brady.”

Before Senator Barrasso introduced his bill last year, Koch Industries'
lobbyist Philip Ellender sent a letter to various members of Congress asking
for an end to the EV tax credit and all energy related subsidies

    “Instead of expanding this subsidy for wealthy EV owners, Congress
should eliminate it along with all other energy incentives — including
eliminating any incentives given to us and our competitors where we may
participate. We are focused on long-term value creation, not short-term

While the federal government would gain significantly more revenue by
killing the tax breaks to wildly profitable oil and gas companies, Senator
Barrasso's legislation is only focused on the part of the Koch Industry's
request that would repeal the relatively small tax credit that makes it
easier for Americans of all income levels to enjoy the economic and
environmental benefits of electric vehicles.

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