Stupid hybrid tax incentive quotas

If you buy a hybrid vehicle, don't assume you'll get a tax credit. The federal government has a quota system based on manufacturers and brands of cars.

I already own a hybrid (a Ford Escape) but am toying with the idea of going for the gusto by trading in the old Ford for a gas-sipping Honda Civic or Toyota Prius hybrid. When I bought my Ford, Uncle Sam sweetened the deal by giving me a tax credit of around $2,000, so my expectation was a similar financial incentive if I went for a more economical model. Not so fast! In its infinite wisdom, the federal government created one of the dumber set of guidelines you could ever imagine.

Once a manufacturer (for instance, Ford, Honda, Toyota, etc.) exceeds sales of 60,000 hybrid vehicles, the IRS phases out tax credits over the course of a year. Since Toyota is killing it with the Prius, it passed the 60,000 mark years ago.

So here's the net effect. If you decide to buy a Prius, decrease the United States' dependence on foreign oil, help improve national security, and do your part to reduce carbon emissions, you get nothing in return because the federal government came up with some lame-brain quota system based on manufacturers and brands of cars. Ridiculous!

I know I'm out on a limb, but I firmly believe that with gas at over $4 per gallon in many areas, the federal government should be reducing the speed limit, pushing states to eliminate tolls, and absolutely persuading taxpayers to buy cars with higher mpg. Given the energy goals we hear everyday from the presidential candidates, the cap on hybrid tax credits is just plain stupid.

Jon Oltsik is a senior analyst at the Enterprise Strategy Group.
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