October 29, 2018

Extending the Electric Vehicle Tax Credit Undermines Tax Reform

Veronique de Rugy

Senior Research Fellow

Tax complexity is a breeding ground for government corruption. It's much easier to add new corporate handouts to a tax code that's already overrun with favoritism, and it's simpler for politicians to justify adding narrowly targeted benefits when the practice is already common. Businesses, in turn, have an incentive to spend more time and resources lobbying the government than satisfying customers.

That's why simplification of the tax code was one of the objectives of tax reform. The Tax Cuts and Jobs Act brought a larger standard deduction that means far fewer taxpayers will itemize. It also eliminated numerous deductions and the capping of others. Yet many special provisions and exemptions remain. Among them is the tax credit that comes with the purchase of an electric vehicle...

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