Congress returned to Washington this week to start its now ritual end-of-the-year lame-duck session — the final one for Sen. Orrin Hatch of Utah, who will be retiring at the end of the year.
Hatch, with nearly 42 years of service, will retire as the longest-serving GOP senator in history. During his career, Sen. Hatch has worked across the aisle to pass landmark legislation, including the Americans with Disabilities Act and the Children’s Health Insurance Program.
{mosads}As a long-serving member of the Judiciary Committee, Hatch has overseen countless important judicial nominations. More recently, as chairman of the Senate Finance Committee, Hatch played a crucial role in passing President Trump’s historic tax reform.
Given his storied career, it is not a surprise the President Trump honored Sen. Hatch with the Presidential Medal of Freedom.
However, looming over Hatch’s final days in the Senate is the possibility of yet another “tax extenders” bill, a hodgepodge of corporate and special interest tax breaks ranging from biodiesel manufacturing and motorsports complexes to racehorses and alternative vehicles.
Last night, House Ways and Means Committee Chairman Kevin Brady released a draft version of the tax extenders package, which could be voted on as early as this week without so much as a committee hearing. Sen. Hatch can further enhance his legacy by refusing to play along, ending the business of picking winners and losers at the expense of hardworking American taxpayers. After all, that is exactly what the historic Trump tax reform was intended to fix.
At a minimum, Sen. Hatch should refuse to give in to the whims of his Senate colleagues, like defeated Sen. Dean Heller, who has been lobbying to include revisions to the electric vehicle tax credit in any extenders package.
When Hatch introduced the EV tax credit, called the Fuel Reduction using Electrons to End Dependence on the Mid-East (Freedom) Act, he made it clear that the purpose of the tax credit was to establish energy independence and that these tax incentives would be temporary. On June 14, 2007, he stood before Congress and explained:
I want to emphasize that like the tax credits available under current law for hybrid electric vehicles, the tax incentives in the FREEDOM Act are temporary. They are needed in order to help these products over the initial stage of production, when they are quite a bit more expensive than older technology vehicles, to the mass production stage, where economies of scale will drive costs down and the credits will no longer be necessary.
To ensure this, Hatch was wise to include a cap that only allows the tax credit to be applied to the first 200,000 electric vehicles sold by a company. Today, the three companies that have been the biggest beneficiaries of the tax credit — General Motors, Nissan and Tesla — have either exceeded the 200,000-vehicle production limit or are rapidly approaching the mark. Additionally, the debate over the tax credit no longer involves securing our energy independence, as the United States is now the largest crude oil producer in the world.
Furthermore, the EV tax credit nearly exclusively benefits corporations and the wealthy. As a recent paper by the Pacific Research Institute explained, federal manufacturing grants and loans for the purchase of EVs and the necessary infrastructure have been worth $40.7 billion over the lifetime of the programs, and the specific federal tax credit for EVs has had a total budgetary cost of up to $2 billion over the program’s lifetime. These tax credits mostly go to wealthy purchasers of EVs.
For the 2014 tax year, households with an adjusted gross income of $100,000 or above made up 78.7 percent of the recipients of the federal consumer EV tax credit. And with California’s share of U.S. EV sales increasing to 52.9 percent in April of 2018, for example, the program is hardly benefitting residents of the Beehive State.
In a recent video posted by his office, Sen. Hatch said, “I’ve always been a fighter. I was an amateur boxer in my youth, and I’ve brought that fighting spirit with me to Washington. But every good fighter knows when to hang up the gloves.”
Let’s hope that Sen. Hatch has one more fight in him by refusing to advance yet another tax extenders package. At a minimum, let’s hope he protects Utah taxpayers by blocking the lobbying push from Sen. Heller, Tesla’s Elon Musk, and GM’s Mary Barra to lift the production cap on his EV tax credit.
Thomas J. Pyle is president of the American Energy Alliance.