House Representatives Panetta & Blumenauer introduce "e-bike Act" federal tax credit

Tom@WashDC

Active Member
Region
USA
City
Loudoun County, VA
This seems like bad policy. The majority of E-Bike purchasers are 60 and older. Most of them have plenty of money/assets, and don't commute to work. The bikes are being used mostly for leisure activity so they will actually consume more energy rather than "save energy". Most importantly this "tax credit" is actually a tax on all citizens, that will go straight into Chinese manufacturing pockets and increase the indebtedness of U.S. taxpayers.
 

Dewey

Well-Known Member
This seems like bad policy. The majority of E-Bike purchasers are 60 and older. Most of them have plenty of money/assets, and don't commute to work. The bikes are being used mostly for leisure activity so they will actually consume more energy rather than "save energy". Most importantly this "tax credit" is actually a tax on all citizens, that will go straight into Chinese manufacturing pockets and increase the indebtedness of U.S. taxpayers.
If it works as intended hopefully the average age of ebike owners will fall as more people consider getting one instead of or to complement buying a car. It’s difficult given the global supply chain of bicycle parts how a universal tax credit would work that excluded parts from China, and given they’re only talking a 15% credit it’s hard to see how copying rule of origin regs under the USMCA/NAFTA to mandate a percentage of parts be made in the US would offset the general price increase of domestic bicycle production, maybe if they worded it to include our neighbors Mexico & Canada, there’s a massive new bicycle factory in Mexico that could supply frames, if we invest in domestic battery production that would help.
 
Last edited:

Art Deco

Well-Known Member
Region
USA
City
Selinsgrove Pennsylvania
If it works as intended hopefully the average age of ebike owners will fall as more people consider getting one instead of or to complement buying a car. It’s difficult given the global supply chain of bicycle parts how a universal tax credit would work that excluded parts from China, and given they’re only talking a 15% credit it’s hard to see how copying rule of origin regs under the USMCA/NAFTA to mandate a percentage of parts be made in the US would offset the general price increase of domestic bicycle production, maybe if they worded it to include our neighbors Mexico & Canada, there’s a massive new bicycle factory in Mexico that could supply frames, if we invest in domestic battery production that would help.
Building ebikes isn't rocket science. Why I bet someone could even retrofit one of the hundreds of empty machine shops around the great lakes to make bikes in the USA if there was a chance of selling them ...
 

Dewey

Well-Known Member
Building ebikes isn't rocket science. Why I bet someone could even retrofit one of the hundreds of empty machine shops around the great lakes to make bikes in the USA if there was a chance of selling them ...
I seem to recall @Ravi Kempaiah posting on another thread a list of reasons why large scale domestic US ebike manufacturing is not going to happen anytime soon, but if our Congress could collectively work to invest in domestic manufacturing of batteries, circuit boards, cleaner energy production and storage, technical education, charging & bicycle infrastructure, etc, the hard stuff, then the US might be able to get into the ebike manufacturing business but let’s not kid ourselves this can happen until there are some profound changes made in national priorities. I wish the Build Back Better Act well, even small steps help.
 
Last edited:

Asher

Well-Known Member
An ebike tax credit may be a good idea... For when the bike shortage ends, which experts say won't be until 2023. Until then, an ebike shortage is like trying to make Sotheby's more affordable by giving all the auction bidders more money - it's just going to let prices go up, or at best, supply sell out infinitesimally quicker.

This may not apply to ebike kits if they don't rely on the same constrained supply chain as complete bikes. Subsidizing only a subset of people, like the poor, might also be less problematic, but a 15% subsidy is hardly going to move the needle.

A repair subsidy for all bikes ($50-100 annually) would generate far more American jobs and physical activity, and far less material waste per dollar of subsidy - plus it would be open to everyone who already owns a bike they like, and would subject less pressure on the bike supply chain overall.

Moreover, it doesn't really make sense to subsidize ebikes to boost their use in transport when... Ebikes are already vastly cheaper than driving or even public transit. Making public transit free, by the same token, has largely failed to lure drivers. The poor aside, people are not avoiding using ebikes for transport for reasons of cost, so subsidizing them is a non-solution to the real problems (lack of safe routes and low proximity to destinations). What you get is people buying them as leisure toys.

What we have is a bill calculated to line industry's pockets, and less so one to efficiently boost cycling, physical activity, and sustainability.

 

Attachments

  • Screenshot_20210911-211250_Brave.jpg
    Screenshot_20210911-211250_Brave.jpg
    202.5 KB · Views: 7

Art Deco

Well-Known Member
Region
USA
City
Selinsgrove Pennsylvania
An ebike tax credit may be a good idea... For when the bike shortage ends, which experts say won't be until 2023. Until then, an ebike shortage is like trying to make Sotheby's more affordable by giving all the auction bidders more money - it's just going to let prices go up, or at best, supply sell out infinitesimally quicker.

This may not apply to ebike kits if they don't rely on the same constrained supply chain as complete bikes. Subsidizing only a subset of people, like the poor, might also be less problematic, but a 15% subsidy is hardly going to move the needle.

A repair subsidy for all bikes ($50-100 annually) would generate far more American jobs and physical activity, and far less material waste per dollar of subsidy - plus it would be open to everyone who already owns a bike they like, and would subject less pressure on the bike supply chain overall.

Moreover, it doesn't really make sense to subsidize ebikes to boost their use in transport when... Ebikes are already vastly cheaper than driving or even public transit. Making public transit free, by the same token, has largely failed to lure drivers. The poor aside, people are not avoiding using ebikes for transport for reasons of cost, so subsidizing them is a non-solution to the real problems (lack of safe routes and low proximity to destinations). What you get is people buying them as leisure toys.

What we have is a bill calculated to line industry's pockets, and less so one to efficiently boost cycling, physical activity, and sustainability.

You are correct. Welcome to the era of printing money. Compared to the other press runs already scheduled, eBikes are a rounding error. And China hopes to make cheap eBikes for their domestic market.
 

Asher

Well-Known Member
Alternatively, reinstating and raising the tax deduction for bike spending to $50+ a month is a much better idea, and is also being proposed. It applies to everyone, to bikes old and new, analog and electric, and opens the door to even employer subsidized bike leases or parking (because without this deduction, they would have to pay taxes on such employee benefits). Car parking and public transit have deductions in the hundreds of dollars per month.

The big problem with it is it's only for commuting, and many employers may not offer the benefit. But a big improvement over the nothing we have now.
1631416059007.png
 

Dewey

Well-Known Member
Alternatively, reinstating and raising the tax deduction for bike spending to $50+ a month is a much better idea
The issue as you point out would be with the implementation, for example DC has a law requiring employers to offer some kind of bicycle commuting benefit and many like my University have chosen subsidized Bikeshare membership. On the one hand it would be nice to receive money towards tune ups, tubes, and other consumables, on the other hand I want private companies to continue to subsidize Bikeshare. I recognize employees ought to have the choice.

This morning’s Washington Post article reports on the horse trading over the reconciliation bill which is called the Build Back Better Act and would include this measure, though it would have more appropriately been funded by the already agreed infrastructure bill. I fear ebikes will not be included in the final bill, this would be a mistake as it runs counter to the stated goals of increasing transportation equity and access, but may fall victim to the nickle and dimeing in the negotiations that will cut the final cost of the bill. This quote stood out to me:

”“There’s more good things that we want to get done than there is revenue to do it,” said Sen. Christopher A. Coons (D-Del.), a close Biden ally. “There are hard choices. That’s the point of this month.””
Source: https://www.washingtonpost.com/poli...c4106c-122f-11ec-bc8a-8d9a5b534194_story.html
 
Last edited:

Asher

Well-Known Member
The issue as you point out would be with the implementation, for example DC has a law requiring employers to offer some kind of bicycle commuting benefit and many like my University have chosen subsidized Bikeshare membership. On the one hand it would be nice to receive money towards tune ups, tubes, and other consumables, on the other hand I want private companies to continue to subsidize Bikeshare. I recognize employees ought to have the choice.

This morning’s Washington Post article reports on the horse trading over the reconciliation bill which is called the Build Back Better Act and would include this measure, though it would have more appropriately been funded by the already agreed infrastructure bill. I fear ebikes will not be included in the final bill, this would be a mistake as it runs counter to the stated goals of increasing transportation equity and access, but may fall victim to the nickle and dimeing in the negotiations that will cut the final cost of the bill. This quote stood out to me:

”“There’s more good things that we want to get done than there is revenue to do it,” said Sen. Christopher A. Coons (D-Del.), a close Biden ally. “There are hard choices. That’s the point of this month.””
Source: https://www.washingtonpost.com/poli...c4106c-122f-11ec-bc8a-8d9a5b534194_story.html
Not sure if it matters but the commuter benefit as a separate bill had Republican sponsors but the ebike subsidy had none.

As for giving employees the choice, I think it depends on how the employer implements it, and they often use an outside party to administer it who let's you pick your pretax benefits.

Also, especially with large employers, local transit agencies or bikeshares may cut a deal, where each employee gets a monthly pass for say, 75% off regular price and the employer paying the 25%, but the employer pays for ALL employees.
 

Dewey

Well-Known Member
BRAIN report on the outcome of the Markup process in the House Ways and Means Committee. Among the changes from the wording of the E-Bike Act is a reduction of the value of the individual tax credit to 15% up to a max of $750 per ebike (up to 2 ebikes and $1,500 for couples who Joint file taxes), with phased restrictions for higher income earners, applicable on Class 1-3 ebikes costing up to $8,000. The Build Back Better Act now advances to the House Budget Committee.
 

arcom

Active Member
in order to receive the benefit, “e-bike manufacturers have to assign a "qualified identification number,”

e-bike manufacturers means Chinese companies. That might prove to be a problem depending on how they define a “qualified identification number.“ If it’s anything like the VIN on an automobile, it could difficult for Chinese companies to comply.
 

Asher

Well-Known Member
BRAIN report on the outcome of the Markup process in the House Ways and Means Committee. Among the changes from the wording of the E-Bike Act is a reduction of the value of the individual tax credit to 15% up to a max of $750 per ebike (up to 2 ebikes and $1,500 for couples who Joint file taxes), with phased restrictions for higher income earners, applicable on Class 1-3 ebikes costing up to $8,000. The Build Back Better Act now advances to the House Budget Committee.

I'm not looking forward to the debates of the future, where after this subsidy fails to do much of anything, some will say ebike subsidies will never work, and others that they were too small. (I would say the subsidies should be big but highly targeted to cases where affordability is an issue, and where they are being used for transport - i.e. don't cover recreational models, or where they are directly replacing old dirty vehicles like two stroke mopeds & diesels)
 

Dewey

Well-Known Member
I'm not looking forward to the debates of the future, where after this subsidy fails to do much of anything, some will say ebike subsidies will never work, and others that they were too small. (I would say the subsidies should be big but highly targeted to cases where affordability is an issue, and where they are being used for transport - i.e. don't cover recreational models, or where they are directly replacing old dirty vehicles like two stroke mopeds & diesels)
The proposed tax incentive does not cover ebike kits which are less expensive and a low stakes entry to ebikes for people on low income, I wonder if they were worried it would be used to subsidize people buying high power kits and controller mods?

The wording includes language that seems close to asking for a VIN number, its unclear if this is in fact worded to include frame numbers and People for Bikes seem happy so perhaps requiring manufacturers to provide an ID number is not going to be an issue.
 

Asher

Well-Known Member
The proposed tax incentive does not cover ebike kits which are less expensive and a low stakes entry to ebikes for people on low income, I wonder if they were worried it would be used to subsidize people buying high power kits and controller mods?

The wording includes language that seems close to asking for a VIN number, its unclear if this is in fact worded to include frame numbers and People for Bikes seem happy so perhaps requiring manufacturers to provide an ID number is not going to be an issue.
I recall very early on the author of the bill flagged kits as an important consideration, and that they were considering amendments to support them. So it's certainly curious that those were never made.

I'm something of a transportation wonk, and I've seen plenty of wonky policies discussed here and there. But everything about this subsidy to date, and in particular its glaring flaws in light of its supposed goal of reducing car miles traveled, suggests the whole goal was a money-grab for the industry all along. Those flaws are:
1. subsidizing during a shortage!
2. not tailoring the subsidy to bikes that actually have a chance at replacing car miles traveled
3. A $5k+ ebike required to maximize the subsidy received, when the market average is more like $2-3k
4. Subsidy recurs every three years, for something that ought to last 10+, especially if the government is funding it
5. No minimum consumer protections (hello 90 day warranties!)

And, as you said, no support for kits, another glaring gap given the supposed goal.

They could have made a much better bill, that still shovels plenty of money at the industry, while ALSO being tailored to the goal at hand, of replacing car miles with a repairable, affordable, long-lasting product. They didn't. People for Bikes wrote the bill, and they are an industry group. Industry (and I mean any manufacturing industry) loves products that cost a lot, get replaced often, use proprietary standards, and go obsolete at will. That's today's e-bike industry. A good subsidy bill would fight all that, in return for cash towards wares, but this isn't that. (I'm told that California's electric vehicle rebate actually required a ten year warranty on the battery, for instance.)

The analog urban/road bike market, compared to e-bikes, is hopelessly bleak to a profiteer. The bikes can last a lifetime, there's no 'customer lock-in', maintenance costs are a pittance, the manufacturer may well see no money ever after from that bike sale, and the practical benefit of buying a new bike later (at the same price) is near zero.
 

Dewey

Well-Known Member
A good analysis, and I agree this is what happens when industry lobbyists write legislation, I haven’t seen an earlier draft but I presume those members of the Congressional bike Caucus who actually know what they’re talking about like Blumenauer had a different goal in mind, but this is the end result of this round of sausage making on Capitol Hill. I agree this tax rebate may not give the kick in the arse the US market needs, but it is a start, and if it means more funding for bicycle and pedestrian infrastructure, like more miles of PBL’s, bump outs and road bumps to slow speed on streets, it’s a trade off we can live with for now - I was reminded this week that reducing the potential for traffic violence matters more to Shift the goalposts towards incentivizing riding bikes after a five year old was killed riding her bike in DC and I had my first near miss of the year, some of the PBL measures currently being enacted in DC are not very expensive relatively speaking, and the more safe infrastructure for people and bikes is funded and spread around, the more people can feel safe cycling and maybe more likely to consider going car-lite, the greater the likelhood measures like this will have actually built back better.
 
Last edited:

Dewey

Well-Known Member
David Zipper, writing in Slate, sheds some light on the sausage making and decisions by the House Ways and Means Cttee to cut the tax incentive in half to 15% and make it means tested so those earning over $80,000 per year cannot get it:
"The House may have added the new limitations due to a weirdly aggressive forecast issued by Congress’ Joint Committee on Taxation, which dramatically increased the cost of funding the credit...The committee projected that claims of the e-bike credit would skyrocket 11 times over 10 years, reaching $1.28 billion in 2030—equivalent to more than 2.8 million people (each making less than $80,000) buying an e-bike costing $3,000. “I would love to have this many e-bikes sold,” said Ken McLeod, the policy director of the League of American Bicyclists, “but it feels optimistic.” Other observers have been blunter, calling the estimate unrealistic."
Meanwhile the bill also channels more funding towards the EV credit for electric cars:
"would provide a tax credit of up to $12,500 off the price of an electric car ($5,000 more than today). And while the e-bike tax credit would be unavailable for the those with an income over $80,000, anyone making up to $400,000 could claim the full value of the electric vehicle credit. Whether viewed through an environmental or an equity lens, that disparity—both in dollar amount and eligibility—makes little sense."
Source: https://slate.com/business/2021/09/bicycles-reconciliaton-congress-ebikes.html