Aren’t Democrats supposed to be opposed to tax cuts and tax credits for the wealthy? Well, the 2022 Inflation Reduction Act, passed with mostly Democrat votes and signed by President Joe Biden, is expanding tax credits for “clean energy” tech. And here’s the rub: According to a study done at the University of California, Berkeley, over half of those tax credits have gone to the top quintile (20 percent) of tax filers.
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Clean energy tax credits have largely benefited higher-income tax filers, according to a new report by economists, illustrating a major pitfall for the Biden administration in its efforts to lower emissions through subsidies.
The top quintile of households by income received 60% of $47 billion in clean energy tax credits claimed from 2006 to 2021, according to the paper, which was done by researchers at the University of California, Berkeley, and circulated Monday by the National Bureau of Economic Research. The tax credits were awarded for buying heat pumps, solar panels, electric vehicles, and other clean energy technologies.
Many of the credits were subsequently expanded by the 2022 Inflation Reduction Act passed by Democrats and signed by President Joe Biden. The study did not directly address the effects of that law but underlined a common criticism that enacting incentives for the adoption of zero-carbon technologies, without also imposing penalties on carbon emissions, is insufficient to reach the goal of net-zero emissions by 2050.
It’s not the role of government to pick winners and losers in this sort of thing. As I’m fond of saying, free markets aren’t perfect, but they usually get things right in the end. If it makes sense financially for people to choose these technologies, then they will choose them. If they don’t make financial sense, people won’t choose them. It’s clean, it’s simple, and it works every time – unless you have agenda-driven government busybodies trying to push ill-advised decisions.
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What’s more to the point is that the government, even when they are getting directly involved, just has a way of making things worse and spending billions of taxpayer (and borrowed) dollars in the process.
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The credits for electric vehicles represent, as Democrats would word it when talking about anything but “green” energy credits, the largest tax break for the rich.
The report added that the disproportion of the tax credits claimed by high-income earners is most dramatic with the electric vehicle tax credit, with the top quintile receiving 80% of all credits and the top 5% receiving about 50% of them.
Now imagine the hue and cry from Democrats if these tax credits were for anything other than one of the left’s biggest pet projects, namely forcing “green” technology on the citizenry.
What’s egregiously wrong about this is that it’s not about efficiency, it’s not about national security, it’s not about Americans choosing for themselves. It’s a heavy-handed attempt to encourage new technologies that have not yet been fully vetted, and some of which (electric vehicles) just plain won’t work for many people – especially rural dwellers and people who live in climates where battery range can be severely reduced by cold or hot weather.
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In other words, much of the United States.
We’re pretty certain to see a change in the inhabitants of the White House in January. With a bit of luck, perhaps we’ll see a GOP-controlled Congress as well. If we do, the repeal of nonsensical garbage like this should be well up on the list of priorities. These tax credits are nonsensical, they are counterproductive, and they are unconstitutional.