Picking Our Pockets With Government Subsidies
Electric cars are the future, right?
In 2017, Americans bought about 200,000 electric vehicles (EVs). That might sound like a lot, but it’s actually about 1% of the 17.25 million total.
Washington politicians sure like EVs, though.
Either that or they all own Tesla (NASDAQ: TSLA) stock. In 2018, Congress passed the Federal Electric Vehicle Tax Credit to encourage Americans to buy green vehicles by offering federal tax credits to anybody who buys an EV.
Some individual states offer state tax credits on top of the federal credits.
The tax credit — not a tax deduction — was as high as $7,500. These credits substantially reduce the cost of buying an electric vehicle.
Sure, the goal of reducing carbon emissions from automobiles is noble.
But any type of government subsidiary alters the free market. It also creates unintended consequences that favor some companies and individuals over others. All at the expense of American taxpayers.
The end result is that the government ends up picking winners and losers.
For example, in 2016 (most recent numbers available), 57,066 taxpayers grabbed $375 million in electric vehicle tax credits.
That’s why today I want to show you how Elon Musk and the U.S. government are stealing your hard-earned cash.
And a way you can use the system against them to get that money back!
Robin Hood…In Reverse!
So far, so good, but if you dig behind those numbers, you’ll find that the tax credits were going to high-income Americans:
- The average Tesla buyer for instance had a household income of $293,000
- The average Ford Focus buyer had a household income of $199,000.
The average American household income is $56,516.
The problem is that electric vehicles, even with a government subsidy, are more expensive than traditional gas/diesel automobiles.
That means EVs are out of reach for most middle-class Americans, even if they really want to go green.
And since all taxpayers end up footing the bill for these tax credits, that means lower/middle-class Americans are subsidizing high-income Americans.
You’re essentially paying for a share of some rich person’s fancy Tesla.
That’s just plain wrong!
I’m not saying that EVs are wrong — in fact, they are the future.
What I’m saying is that forcing MOST Americans to subsidize the stylish driving habits of a select few affluent Americans is wrong.
Pay Your Own Way to the Tesla Dealership!
I am pleased to say that the tax credits are being gradually phased out.
One of the features of the 2008 federal electric vehicle tax credit act is that the subsidies start to disappear once an automaker sells 200,000 electric vehicles.
The reason is once an automaker hits 200,000 in sales, it doesn’t need the government assistance anymore. Tesla has already hit 200,000 and General Motors will probably hit that number this year.
But surprise, surprise…
Automakers are lobbying hard to extend the tax credits and there are plenty of environmentally friendly lawmakers eager to oblige the automakers.
All at the expense of you and me.
But there’s a way you can get some (if not all) of that money back. All you need is a stake in a high-quality dividend-paying company that participates in the EV market.
Our suggestion for today is General Motors Co. (NYSE: GM).
GM offers shareholders a fat 4.12% yield for every share owned. The company will cut you a check every quarter (four times a year) simply for holding onto your GM shares.
And with GM you can feel comfortable knowing they are a strong company that isn’t going anywhere anytime soon.
And with the tax burden of subsidies slowly waning, you’ll be able to turn the table on Elon Musk and the government robbing you blind to keep the rich in fancy Teslas.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch