'Costly Subsidies for the Rich' by Wayne Winegarden, Debunked

In February 2018, the Pacific Research Institute published a report, “Costly Subsidies for the Rich,” by Wayne Winegarden that misleadingly portrays the electric vehicle (EV) tax credit and other government support for plug-in vehicles as anti-competitive and not beneficial to the average consumer or the environment.

By cherrypicking outdated statistics and ignoring leases, Winegarden asserts that “79 percent of electric vehicle plug-in tax credits were claimed by households with adjusted gross incomes of greater than $100,000 per year.”

Winegarden promoted his report in a commentary for Investors Business Daily, titled “Are Electric Car Subsidies Just Giveaways to the Wealthy?” The PRI report has since been cited repeatedly in a growing number of op-eds and commentaries—including many written by and promoted by the Koch network—including the Wall Street Journal, the Washington Examiner, the National Review, and more. The report is also cited in multiple letters from Koch-affiliated think tanks and front groups to Congressional leaders opposing the EV tax credit.

Wayne Winegarden's 'Costly Subsidies for the Rich' Report, Debunked

The “Costly Subsidies” report's author relies on outdated data from 2014, when the EV market was still in its infancy and many of the mid-range models that are available today had not yet been introduced. Additionally, the IRS data that Winegarden relies on does not factor in the significant role that leases play in the EV market. Through 2017, the vast majority of EVs were leased—a full 80% of non-Tesla EVs and still well more than half of all EVs including Tesla, according to Bloomberg New Energy Finance.

As Wade Malone explains in InsideEVs, these leases have a trickle down effect of making EVs available to all economic classes.

[Leases are] appealing to many middle class buyers for a variety of reasons. The buyer is able to see an immediate reduction in their monthly payment rather than waiting until tax filing season to receive a full or partial tax credit. Secondly, EV tech is rapidly improving. Leasing allows buyers to drive for 3 or 4 years, then move on to the next generation of electrics.

When the vehicle is turned in at the end of a lease, the car hits the used market at a reduced price. Because a used electric car is no longer eligible for the $7,500 tax credit, dealers price it factoring in the full credit. Otherwise, purchasing new would be more cost effective over used. Because of this, middle class and lower middle class buyers can affordably finance a used EV or PHEV [plug-in electric vehicle]. It is not simply the wealthy who benefit.”

While falsely claiming that nearly 80 percent of all EV credits benefit households that earn more than $100,000, the report ignores the fact that the average income of households that purchase any new vehicle — plug-in or gasoline powered — is even higher than that. According to a report by the National Center for Sustainable Transportation, the average household income for new car buyers was $119,400 in 2012.

The Pacific Research Institute: The Oil-Funded Think Tank that Published Wayne Winegarden's Flawed Electric Vehicle Tax Credit Report

The Pacific Research Institute (PRI), known as the Pacific Research Institute for Public Policy (PRIPP) until 1984, is a conservative think tank with close ties to the American Enterprise Institute. PRI receives extensive funding from the oil and gas industry, including the Koch Family Foundations, Koch Industries, the Scaife Foundations, ExxonMobil, and Donors Trust and Donors Capital Funds.

has received over $1.7 million in donations from Koch-related foundations, $3.8 million from Scaife foundations, and $615,000 from the oil company ExxonMobil. The Pacific Research Institute also received over $1.5 million from DonorsTrust and Donors Capital Fund, two groups that have been described as the “Dark Money ATM” of the conservative movement. 

Wayne Winegarden: The “Costly Subsidies” Report Author

Wayne Winegarden is an economist who serves as a Senior Fellow in Business & Economics for the Pacific Research Institute and is the Principal of Capitol Economic Advisors. Earlier in his career, Winegarden worked for Phillip Morris, where he authored numerous reports claiming that excise taxes on cigarettes were highly regressive and unfairly punitive for low-income consumers.

Winegarden was also a partner at Arduin, Laffer & Moore Econometrics, a conservative economic consulting firm that was an influential member of ALEC and has numerous ties to the Koch network

Winegarden has written that global warming is a “scam.” In recent years, he has published a number of reports for PRI arguing against the EV tax credit, the Clean Power Plan, and the Obama-era clean car standards.