WASHINGTON -- A key Senate Democrat is scrutinizing an Obama administration proposal to transform the $7,500 tax credit for electric-vehicle buyers to a comparable rebate at the point of purchase, aides to the U.S. senator said.
Sen. Max Baucus, chairman of the finance committee, "is very concerned from an effectiveness standpoint," said Ryan Abraham, a counsel for the panel, which handles tax legislation.
Abraham told the Electric Drive Transport Association conference here Wednesday that the proposal might not provide as much incentive to potential EV customers as the current tax credit. Baucus is concerned the plan also could add a layer of complexity to the tax code, the aide said.
Abraham's comments suggest that Obama's proposal and similar legislation submitted by Sen. Debbie Stabenow, D-Mich., are in trouble.
Later, a spokesman for the Senate Finance Committee, who also reports to Baucus, disputed Abraham’s statement.
Abraham’s assessment "does not at all reflect the views of Sen. Baucus, who is still evaluating the proposal, and it is not accurate to say he has concerns," said committee spokesman Scott Mulhauser.
Baucus, D-Mont., is the most powerful member on tax matters in the Democratic-run Senate, which is generally far more supportive of Obama than the Republican-controlled House.
A White House spokesman had no immediate comment.
Existing program deemed safe
Abraham said, though, that the current $7,500 EV tax-credit program, which began during the Bush administration and was expanded under President Obama, is safe from Washington budget cutters.
"I don't think members will have much appetite to repeal current law incentives," Abraham said.
As part of his February budget, Obama proposed changing the tax credit to a rebate at the point of purchase in an attempt to increase consumer incentives by speeding the $7,500 payment.
Under the proposal, dealers would in effect reduce the sticker price and apply for reimbursement from the government. The $3 billion cash-for-clunkers program operated in much the same way, though the government was unprepared for its popularity and developed a huge backlog of dealer applications.
The National Automobile Dealers Association has questions about how the rebate would work.
"We haven't seen any details in writing yet," said NADA spokesman Bailey Wood.
Abraham said a tax credit is clear-cut and provides a defined incentive for consumers to purchase EVs.
However, if dealers were to give customers a $7,500 rebate at the point of purchase, Baucus is worried that the incentive could become muddled because dealers also have the discretion to lower the price of the car, Abraham said.
Dealers might mix the rebate with a price reduction, confusing the customer as to how much of each he received, the Senate aide said.
Both the consumer and the dealer could conceivably claim a credit on their tax returns, he said. The IRS would have to address this potential complication.