End the electric vehicle tax credit

The federal tax credit for electric vehicles (EVs) has become an ineffective subsidy that primarily benefits wealthy individuals while contributing to a growing budget deficit, accoring to an L.A. Times editorial. Originally introduced in 2008 and expanded in 2022 under the Inflation Reduction Act, the credit has resulted in an estimated $112bn in lost revenue. A study revealed that: “75% of the EV subsidies claimed under the IRA have gone to consumers who would have bought an electric vehicle anyway.” Despite the intention to stimulate the market, EV sales remain stagnant at 7% of the market share, indicating that the credit has not significantly increased demand. Veronique de Rugy, a senior research fellow at the Mercatus Center, argues that the program is regressive and unfair, stating, “Subsidizing high-end car buyers is a poor strategy for achieving meaningful environmental progress.” She advocates for the elimination of the credit to restore fairness and promote genuine competition in the market.