Edited by Larry Kreiser, Ana Yábar Sterling, Pedro Herrera, Janet E. Milne and Hope Ashiabor
Chapter 7: Electric vehicles: plugging into the US tax code
The United States has a long history of experimentation with electric vehicles. In 1904, electric vehicles made up one-third of the ‘horseless carriages’ on the roads in New York, Chicago and Boston; Thomas Edison predicted more electricity would be produced for cars than for lights. Electric vehicles lost the race against gasoline-powered cars, but a century later, the United States is looking again at the future of electric vehicles, driven by concerns about carbon dioxide emissions, energy security and jobs. President Barack Obama has called for the US to become ‘the first country to have 1 million electric vehicles on the road by 2015’, and he has pursued that goal by advocating tax credits for electric vehicles, building on a foundation of tax credits that dates back to 1992. This chapter highlights lessons that emerge from the US experience with tax incentives for alternative fuel vehicles, in particular electric vehicles. After describing the history of federal tax incentives for alternative fuel vehicles, it explores the relative roles of regulation and tax incentives in spurring the development of electric vehicles and the difficulty of maintaining technology neutrality. It concludes with thoughts about the role of tax expenditures in a world of both carbon and fiscal constraints.
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