Monday, January 23, 2006

Hybrid Tax Breaks for the Rich

As I have mentioned before, buying a hybrid is the environmental equivalent of buying a Mustang to pick up chicks (disclosure: I own a Mustang). From the Weekly Standard:

HYBRIDS ARE ALSO failing to pay for themselves in gas savings. A study by the car-buying website calculates gasoline would have to cost $5.60 a gallon over five years for a Ford Escape hybrid to break even with the costs of driving a non-hybrid vehicle. The break-even number was $9.60 a gallon for a Honda Civic hybrid.

Hybrid automakers and their supporters have their defenses. They quibble with how some studies are done. They point out that even with their fuel economy shortcomings, hybrids achieve the best gas mileage in three of five vehicle categories rated by Consumer Reports. Hybrids are still far lower-polluting than diesels. Their sales are growing fast, even though they make up a small 1 percent of America's annual sales of 17 million vehicles.

Then there's the ultimate defense: They are just like conventional cars because drivers buy them for many reasons other than fuel savings and cost. There's the "prestige of owning such a vehicle," says Dave Hermance, an executive engineer for environmental engineering at Toyota, the leading seller of hybrids. After all, many vehicle purchases are emotional decisions, he says.

SO, HYBRIDS have become the environmental equivalent of driving an Escalade or Mustang. Who cares if they deliver on their promises as long as they make a social statement?

Taxpayers should. The federal government subsidizes hybrid fashion statements with tax breaks that benefit the rich. The average household income of a Civic hybrid owner ranges between $65,000 to $85,000 a year; it's more than $100,000 for the owner of an Accord. The median income of a Toyota Prius owner is $92,000; for a Highlander SUV owner $121,000; and for a luxury Lexus SUV owner it's over $200,000.

Update: Scrivener points out that many hybrid buyers don't even get their tax break anyway, due to the AMT.