Lay all Biden energy credits on the chopping block Image By Nicholas Johns It’s time to end Biden-era tax giveaways to wealthy coastal elites. The Democrat-passed and signed “Inflation Reduction Act” endowed the tax code with credits for electric vehicles and alternative home energy supply. But data shows that the people buying electric BMWs and installing solar panels are among the top earners in the country. Americans who make more than $200,000 per year are hardly the population who should benefit from tax credits, according to the Democrats’ own arguments. These tax credits are incredibly expensive, distortionary, and primarily benefit wealthy coastal elites. This year, President Donald Trump and the Republican House and Senate have promised to renew the 2017 tax cuts. Most of these tax cuts were broad-based and conducive to economy-wide growth. To support renewed tax cuts, House Budget Committee Chairman Jodey Arrington (R-TX) is leading the charge to trim the fat from the budget. Chairman Arrington recommended putting these giveaways to the well-to-do on the chopping block. Last week’s House Budget markup of the blueprint for tax cuts demonstrated the urgency members are feeling to find offsets. President Trump and Congress should follow his lead and zero out this Biden legacy item and apply the savings to delivering tax cuts for all Americans. Wealthy coastal elite tax giveaways Biden’s IRA was marketed to the American public as a means to address the rampant inflation spiking prices at the grocery store and other retail destinations. In particular, much of the touted benefits focused on middle class families. But it was actually a bloated bill that mostly helped the upper class. The electric vehicle (EV) tax credits in particular turned out far more costly than originally projected. The Congressional Budget Office initially estimated the cost of these alternative energy credits at $271 billion over ten years. Last year, the same congressional scorekeeper more than doubled that estimate. Under current law, for eligibility for the credit, joint-filing households can make up to $300,000, heads of households can make up to $225,000, and all other filers can make up to $150,000. Income of $300K would put the household at the top 5% of Americans based on Census data. Even $150K would still be extremely close to the top quintile of household incomes. These are wealthy taxpayers who don’t need government subsidies. In 2024, only 5% of households earning less than $99,999 owned electric vehicles. Only 9% considered buying one. It’s clear Biden’s green tax credits encapsulated in the Inflation Reduction Act (IRA) primarily benefit well-off urban white collar workers at the expense of rural blue collar taxpayers. ‘Equality’ in name only Republicans should keep this in mind when Democrats and their cohorts start assailing efforts to restore Trump’s tax cuts as being disproportionately beneficial to the wealthy. Opponents of Trump’s tax cut agenda should not be allowed to claim the moral high ground when three years ago a Democratic trifecta enacted incredibly distortionary and regressive tax giveaways to their wealthy coastal constituents. The unfairness inherent in Biden’s IRA tax credits also extends to regions and states. Coastal states reap far more benefits from the hefty EV subsidy, with California, Washington, Oregon, and Hawaii in the top five. California alone accounts for over a third of electric vehicle registrations in the United States. At over 10%, states with high urban populations have more than double EV uptake than more rural states at only 4%. Political alignment is even worse: blue states register three times as many new EVs as red states. Unfortunately, other credits included in Biden’s IRA are much in the same vein. The bill’s increase of home alternative energy credits also primarily benefits wealthier households and blue states. Congress’ research arm found that high-income taxpayers claimed two-thirds of the total amount of this credit in 2023 while the bottom quartile received only 0.3%. Blue states again won out on the average dollar amount of the credit claimed, with New Hampshire, Hawaii, Connecticut, Minnesota, and Massachusetts topping the list. Deep red states experienced the worst outcome, with Indiana, Louisiana, Georgia, Tennessee, and Mississippi seeing the least benefit from these credits. Biden’s IRA distorts the free market and redistributes wealth to benefit Democratic-leaning, high-income coastal states. In contrast, President Trump’s 2017 tax reform responsibly offset his tax cuts by limiting a long-standing deduction for high earners in high-tax states—the SALT cap. This cap arguably helped balance out tax benefits that disproportionately favor the wealthy, as the affected groups largely overlap. Republicans should keep this in mind when shaping their reconciliation package and resist pressure from outside groups claiming Trump’s tax cuts primarily benefit the wealthy. It’s a classic case of misdirection from the policies Democrats already enacted. President Trump got it right the first time when he enacted a pro-growth tax policy that cut taxes for the vast majority of Americans, spurred booming growth with business tax cuts, and avoided giveaways to special interests. Chairman Arrington is right to target these expensive tax credits to pay for tax cuts for all Americans. It is time for the rest of Congress to roll back Biden’s failed economic legacy once and for all. Nicholas Johns is Senior Policy and Government Affairs Manager at National Taxpayers Union. *The opinions expressed in this column are those of the author and do not necessarily reflect the views of EnergyPlatform.News.
