New Tax Credit Benefits Buyers of Hybrid Cars
Hybrids still represent a small part of the overall vehicle market. Last year, there were just over 200,000 sold in the United States. By expanding the federal tax incentive for gas-electric vehicles, the federal government hopes to offset some of their extra cost and persuade more consumers to buy them.
Under the new energy bill signed into law last summer, drivers who buy a hybrid this year will qualify for a tax credit rather than the tax deduction they had under the old law. The amount of the credit is based on a complex formula of weight and miles per gallon, along with the estimated lifetime fuel savings of a hybrid versus a comparable car or light truck.
But there are those who question how subsidizing hybrid buyers does much to reduce energy consumption. Jonathan Skinner, an economics professor at Dartmouth, says shifting someone from a large SUV to a smaller, more fuel-efficient model can save more oil than shifting someone from an already fuel-efficient vehicle to a hybrid.
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