Dan Walters

Dan Walters: California shows class bias in green subsidies

Tesla, which produces sexy, scary-fast and very pricey battery-powered cars, has a handy website guide to the “incentives” its customers may claim.

Buying a Tesla earns one a $7,500 federal income tax credit, plus rebates and credits from states, including California, which offers a “$2,500 rebate and carpool lane access” to electric car owners.

Obviously, those who can afford Teslas are a very small portion of the state’s residents. Obviously, too, the $10,000 rebates may not be major factors in their decisions to buy.

But it illustrates a dirty little secret of the wide array of tax credits, rebates and other “incentives” that federal and state governments have offered in the name of reducing emissions of carbon and other pollutants: They mostly go to the affluent.

That’s not just a hunch. It’s revealed in research from the University of California’s prestigious Haas School of Business Energy Institute, whose new report on the “distributional effects of U.S. clean energy tax credits” is co-authored by Severin Borenstein, the state’s leading energy authority.

The research was confined to federal subsidies, but would apply to those offered by the state as well.

It found that since 2006, more than $18 billion in federal income tax credits has been given to American households for weatherizing their homes, installing solar panels, buying hybrid and electric vehicles “and other clean energy investments.”

“We find that these tax expenditures have gone predominantly to higher-income Americans,” the report says. “The bottom three income quintiles have received about 10 percent of all credits, while the top quintile received about 60 percent.”

The report also reveals that the “most extreme” example is the subsidy offered to electric vehicle buyers, with those in the top quintile receiving about 90 percent of the credits.

The state’s extra Tesla subsidy – money from all taxpayers and ratepayers – makes the class bias even worse.

Earlier this year, state Sen. Ted Gaines, R-Roseville, proposed to eliminate state tax credits for cars costing more than $40,000, saying, “It’s hard for the average Californian to understand why someone buying a $100,000 car should get a rebate.”

Gaines’ proposal went nowhere, ignored by the Legislature’s majority Democrats, who often rail about the state’s growing income disparities.

The class differential on the benefit side of the “decarbonization” campaign is mirrored on the cost side, inadvertently or otherwise.

Anti-carbon decrees have already pushed Californians’ electric power rates higher, with a disproportionate impact on those at the lower rungs of the economic ladder, particularly in interior regions where air conditioning is a must.

Increasing electric power from “renewable” sources such as wind and solar to 50 percent by 2030, the current goal of Gov. Jerry Brown and other political figures, will doubtless push those rates even higher.

There will be consumer costs, too, of reducing oil-based auto fuel by half, perhaps by making that fuel more expensive.

Tesla-driving residents of affluent coastal communities can easily absorb such burdens – perhaps by applying their generous tax credits.

But what about those not in the “top quintile,” including the 23.4 percent of Californians who the Census Bureau says are poor now, largely due to the state’s ultra-high cost of living?