Free Nissan Leafs in Georgia?  Yep!  For now.

"31ModelA" (car) 04/16/2015 at 17:55 • Filed to: Nissan Leaf, Tax Credit

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If you live in Georgia and you have $200 available and a family of four, you have a choice.

You could (1) almost get four tickets ticket to Six Flags but only if your children get the discount for literally being too short to ride any of the rides, OR (2) you could pay for one month of leasing a Nissan Leaf plug-in electric automobile... and write that whole payment off on your taxes entirely... and have that carry over to every month for the next two years. That's a !!!error: Indecipherable SUB-paragraph formatting!!! for two whole years.

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In case you don't know, Six Flags is an expensive sweltering theme park in Atlanta (and elsewhere) with rides and crowds and doughy funnel cakes, too many funnel cakes for the number of rides. A Nissan Leaf, on the other hand, is where you put your family of four to go to Six Flags before you suddenly realize that Piedmont Park sure is nice this time of year and if you really still want to see just how much dough you can eat you're way better off just gorging at Flying Biscuit. One is a little over $200 before funnel cakes, and the other is a little less per month before you get it all back in taxes.

Like I said, if you live in Georgia you have a choice.

But only until June.

That's because the 2001 tax credit of !!!error: Indecipherable SUB-paragraph formatting!!! for the purchase of a new EV ( and a mea culpa for 20 years of violating Federal air quality standards ) is being replaced. Not with a more modest credit as one might assume, but with something quite the opposite. A $200 annual registration fee, the highest in the nation, on the exact same EVs that get the credit now.

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This means that Georgia will go from America's most generous (probably too generous) patron of EV purchasers to it's most egregious and aggressive tax collector on the same group of people, overnight. First to worst baby! Just like the !!!error: Indecipherable SUB-paragraph formatting!!! ...but the opposite.

You might think that a step down or even a complete phasing out over time of the credit would have been a much more palatable move in the state with the highest U.S market share of EVs. But that wouldn't address the central issue of fairness as envisioned by the bill's primary author, Rep. Jay Roberts.

Jay Roberts of Ocilla, GA (a town whose google search result at this time includes !!!error: Indecipherable SUB-paragraph formatting!!! ) needs funding for his transportation bill. And Mr. Roberts doesn't seem to think it's fair that EV drivers are leaching funding in the form of tax credits all while skirting the road tax entirely by foregoing gasoline.

The solution, therefore, is a thoughtful and deliberate calculation of the EV buyer's fair share of the road tax. Or as Roberts puts it..."fuzzy math"

Fuzzy Math

Honestly, Roberts is being generous with the term, because put into words this math sounds about as "fuzzy" and cuddly as a dread lock caught in a weed eater. Quoting from the AJC who paraphrases Roberts (emphasis added),

[Jay Roberts] took the average number of miles driven per year, as reported to insurance companies (12,000). He doubled it, because he believes people really drive more like 24,000 miles per year. Next he calculated the fuel taxes someone would pay for driving 24,000 miles per year (about $175 a year, he said). And finally, he rounded that up to $200 , he said.

Doubled it!!! AND STILL rounded up!!!

Again, the AJC brings us the numbers, the BIG numbers:

The $5,000 tax credit that goes to consumers who buy or lease an electric car [would have] cost the state $628 million from 2016 through 2020, according to an official state estimate.

HB 122 is not the only piece of legislation to target the tax credit. The same language was added to !!!error: Indecipherable SUB-paragraph formatting!!! *** the bill that House leaders hope will raise more than $1 billion a year in new revenue for transportation projects.

***HB170, which eliminates the $5000 credit and imposes the $200 fee, was signed today.

That's $1 billion with a Big Bold "B".

And do you know which upcoming transportation project costs $1 billion?

Well that would be the cost of re-routing traffic to accommodate the new Atlanta Braves stadium that basically no one wants. Even still, this particular billion is not one that anyone cares to be shy over, seeing as it appears right there on the Braves' page at !!!error: Indecipherable SUB-paragraph formatting!!! :

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More than $1 billion in investments are being made in enhancing the existing roadways near the site. The Georgia Department of Transportation is widening one of the bridges over U.S. 41/Cobb Parkway and is planning to widen the Windy Hill bridge over I-75 and add a diverging diamond interchange at the Windy Hill/I-75 interchange. Plans also call for widening Cobb Parkway from Paces Mill to Akers Mill Road.

If you hate publicly funded stadiums, and you truly care to follow this rabbit hole any deeper, head on over to Deadspin where they recount just how Cobb County, Georgia plans to !!!error: Indecipherable SUB-paragraph formatting!!! , let alone the "enhanced roadways".

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Correlation or causation...it still comes down to outcome

Of course, it's necessary to admit at this point that the $1 billion envisioned by the transportation funding bill and the $1 billion needed to "enhance the roadways" around the new baseball stadium could be pure coincidence.

But regardless of if the two are correlated ( oh my gah...admit it, they definitely are! ), the cause is still the same - the most fertile EV market in America is about to be gutted and cleaned by the same people that enticed it and fed it in the first place.

So, for the first time ever, there is a soft spot in my electric-vehicle-loving heart for car dealerships, particularly those now sitting on a huge steaming piles of Nissan Leafs as the rubble from the Nation's best EV market piles up around them.

How to Succeed in Politics and Life

The most troubling aspect of this, though, is not the elimination of the most generous tax credit around. It's not even that EV buyers will now be compelled to participate in funding the construction and maintenance of roads just like the rest of us gas-burning folks do. It's how Roberts went about achieving the $200 number.

Without any signs to the contrary, he basically let the arrow fly and then painted a bullseye around it. That's how you succeed in politics.

How you succeed in life is to go out and get every last free Leaf there is before the most generous EV tax credit around breaths its last labored breaths. June will be here before you know it and you will wake up from the free electric car dream.

area man > 31ModelA 04/16/2015 at 18:08

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Here's what I don't understand and have never understood as long as Doug has been making these jokes in his columns: writing something off  getting the money back. Or does it? I fully admit I am a tax law neophyte but that has always been the way it's explained to me.

Mr. Ontop, No Strokes, No Smokes...Goes Fast. > 31ModelA 04/16/2015 at 18:14

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Well, I just shared this with all my friends in Georgia.

jkm7680 > 31ModelA 04/16/2015 at 18:14

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Clickbait title much?

nermal > 31ModelA 04/16/2015 at 18:16

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I get the point of charging EVs extra to make up for lost fuel tax, but cars generally aren't what messes up highways.

A 3,500 lb car won't do nearly as much damage as an 80k lb tractor trailer.

That said, if you live in GA and your lifestyle fits the parameters of an EV, you'd be foolish not to get one now.

nermal > area man 04/16/2015 at 18:22

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You are correct, writing something off does not mean the IRS gives you a credit for the amount that you write off. However, the amount that you write off does not count as income, therefore you do not have to pay tax on it.

Let's say you are pretty well off, in roughly the $90k - $190k income range. Any income you make in this range is taxed @ 28%.

If you write off $10k in expenses, you do not have to pay the 28% tax on that income, therefore you save $2,800.

Spending $10k to save $2,800 is dumb. Saving $2,800 on something that costs $10k is a good deal though.

Make sense?

BrianGriffin thinks “reliable” is just a state of mind > area man 04/16/2015 at 18:22

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it's the difference between a credit and a deduction. The $7k you get from the Feds for an electric car is a credit; you get all of it off your total tax due. The mortgage interest you pay is a deduction; it reduces your taxable income, so you just save your % of that amount (whatever your tax bracket is).

In Dougs case, he's using those expenses to reduce his CORPORATE income on his 1120-S. Whatever corporate income (ie: money gawker pays him minus expenses for the cars and whatever else job related) is remaining gets carried over to his personal return as his personal income.

MIATAAAA > 31ModelA 04/16/2015 at 18:22

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Why is GA so freaking horrible and weird about car anything?

I looked at moving (along with my 4 cars) down there. And I have to pay tax (well, technically it's not a "tax", but it is) on all my cars again.

What?

Possibly the worst thing about Atlanta.

MIATAAAA > area man 04/16/2015 at 18:26

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You're absolutely correct. A "write-off" (also known as a deduction) reduces your taxable income. So if you "write-off" or "deduct" $200 a month ($2400 annually) then you don't get taxed on that portion of your income.

However, if this article means you get a $200 monthly credit for your payments, then that's just plain cash you don't have to pay on your taxes.

write-off or deduction = money reducing your taxable income

credit = money that you directly do not owe

rb1971 ARGQF+CayenneTurbo+E9+328GTS+R90S > area man 04/16/2015 at 18:26

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31ModelA > area man 04/16/2015 at 18:26

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It most certainly is NOT the exact same thing. (But for the effect of the article, it "is the same"...otherwise no free Leaf.) (Accountants....here's your chance to rip me a new one.)

No one's finances - except maybe Doug's because he's filthy stinking rich - read day to day like a completed year-end balance sheet because regular people have to account for monthly (or so) cash flow. Tax credits won't affect your cash flow per se (the $200/mo. going out the door). Instead it will only ease your tax liability so it's as if you owed $5000 less in taxes, and so may briefly affect cash flow. Also, the credit is a "tax credit", not a "spending credit" - so you still have to "spend" the money to accrue the taxes.

I do not know whether or how much of this particular credit is refundable to you if you owed less than $5000 in taxes. Either way, it's not the same thing...but it also kind of is. Happy Tax Season!

nermal > BrianGriffin thinks “reliable” is just a state of mind 04/16/2015 at 18:28

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The $7,500 federal EV incentive is a reduction in tax liability. It will not reduce your tax liability to < $0.

So, if you only made enough (or deducted enough other stuff) that your total tax liability for the year is $5k, the federal EV incentive will reduce that to $0, netting you $5k outta the deal.

If you owed $10k, the incentive would reduce that to $2,500, netting you the full $7,500.

speedoption > jkm7680 04/16/2015 at 18:32

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it is and it isnt. The people like my self who live in ga, know that if you bought an ev before that law. You technically drove it for free. For years. it was so much back in incentives. ... now they ruined a market. And potentially more.

speedoption > 31ModelA 04/16/2015 at 18:33

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Oh the lovely sick things that go on in my town. Need we mention the threat Delta received by a congressman for stating his opinion. ...

31ModelA > jkm7680 04/16/2015 at 18:34

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Sure sounds like it, but it's actually (basically) true. The lease payments on a base Leaf are right around $200 and the tax credit (not a deduction, a credit) is $5000. That's about 25 months worths of $200 payments credited back.

I have a bunch of friends in Georgia who now drive base model Leafs because their payment amounts to zero. In a city like Atlanta where the commute is horrible, it's nice knowing your car is essentially free.

31ModelA > nermal 04/16/2015 at 18:38

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Your exactly right. OTR and other commercial truck/trailer tags are graduated based on the maximum weight of the vehicle plus cargo. Those weigh stations are there to ensure that the heavy vehicles going down the road have the right "X" tag for their load. (X1, X2, X3, etc based on weight categories.) If they don't they get a pretty hefty fine. That said, the money collected from the steep price of some of these tags then has to be spent to repair the roads these same trucks destroy, but that's rarely the case.

jkm7680 > 31ModelA 04/16/2015 at 18:39

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Except the bit where it's recommended that you make more than $60,000 a year.

31ModelA > jkm7680 04/16/2015 at 18:39

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maybe i missed that part.

area man > nermal 04/16/2015 at 18:44

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Yeah, that makes a lot of sense. Thanks! It's always confused me because people talk and make jokes about it like spending $10K on frivolous shit that can technically be written off is a good deal... it's like, OK, you'll get SOME of that back in 6 months to a year or whatever, but you're still shelling out a bunch of money upfront.

area man > 31ModelA 04/16/2015 at 18:49

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Maybe I am just shortsighted (or it could be bc I'm in my mid-20s), but cash flow is far more important to me than tax credits.

31ModelA > area man 04/16/2015 at 18:52

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not short sighted at all...cash flow matters a ton. if you can't manage cash flow you'll miss or won't be able to make that $200 payment that lands 1 week before your paycheck and that car with the $5000 credit goes back to the dealer and your credit is rocked. If you can learn to manage solid cash flow in your 20s, you're ahead of the game.

but that's also why this deal works so well as a lease. you're not really shelling out that much (if any, depending on the dealer) up front. And if you're in Georgia, particularly atlanta, the Nissan dealers are sweating bullets right now trying to get these off the lots. This tax credit was the essential reason for any Nissan dealer to stash Leafs. And as bad a commuting town as Atlanta is, the last thing you'd want to do with your other car - assuming you have one - is sit in bumper to bumper traffic in 100 degree heat surrounded by very frustrated people.

BrianGriffin thinks “reliable” is just a state of mind > nermal 04/16/2015 at 18:55

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It's not a credit? I thought it was like the homebuyers credit of 2010. Thanks for the update :)

Funktheduck > 31ModelA 04/16/2015 at 19:15

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I know 3 people who bought leafs, in part, because of this credit.

Funktheduck > 31ModelA 04/16/2015 at 19:18

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This braves stadium thing makes me so mad. I'm just glad I'm not in Cobb anymore. They'll spend $1 billion to do things for a stadium no one wanted yet they won't spend $5 to fix the pot holes on every road around my house. They did repave part of one road nearby. I have to swerve around like a drunk just to keep my tires and wheels and suspension alive.

BurnBabyBurn > 31ModelA 04/16/2015 at 19:40

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There a a few tax issues to unpack here:

1. If you know you will owe less in taxes at the end of the year you can increase your exemptions on form W-4 so that less taxes are taken our of your paycheck each month. Therefore, the tax credit can have a direct impact on your monthly cash flow.

2. If you itemize your deductions on your tax return you are able to take a deduction for your state taxes paid. Therefore, if you have a tax credit to reduce your state taxes by $5,000 you have also decreased your federal deductions by $5,000. Therefore, for tax payers that itemize their deductions the true value of a state tax credit is the tax credit amount times one minus your tax rate. For example, my federal tax rate is 28% therefore a $5,000 state tax credit is really only worth $3,600 (5,000 * 0.72) to me because I have to pay more federal tax now because I don't have the state tax deductions anymore.

samssun > MIATAAAA 04/16/2015 at 20:06

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It's the same story as any otherwise-reasonable state whose politics are dominated by an urban center: the whole state gets stuck with tax grabs and red tape, because "progressive" politicians have enough dependent voters not to have to answer to actual taxpayers.

See also: Virginia, Illinois, Michigan, Colorado...

31ModelA > BurnBabyBurn 04/16/2015 at 22:22

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I wish I could star this more.