Here is yet another story of what happens when the government tries to pick economic winners and losers.

In 2011, West Virginia leaders were energized by the possibility of an economic boom based on the Marcellus Shale natural gas deposits.  The enthusiasm contributed to passage of the Alternative Fuel Motor Vehicles Tax Credit.

Bill supporters wanted to encourage West Virginians to convert cars and trucks from gasoline and diesel fuel to natural gas to coincide with the emergence of the state’s newest industry.

The legislation grandly stated that “the use of alternative fuels is in the public interest and promotes the general welfare of the people of the state insofar as it addresses serious concerns for our environment and our state’s and nation’s dependence on foreign oil as an energy source.”

The legislation was no doubt well intentioned, but we know the road to ruin is paved with just such delusions.

The first section of the legislation promised a credit of 35 percent of the purchase price up to $7,500 for vehicles that used compressed natural gas, liquefied natural gas, liquefied petroleum gas or ethanol.

However, a second part of the bill also promised the tax credit to purchasers of vehicles engineered to burn flex fuels, such as E85, which is 85 percent ethanol and 15 percent gasoline.  To qualify for the credit, the buyer did not have to use E85, only to purchase a vehicle capable of burning it.

As it turns out, not just green cars fall into that category.

For example, the 2013 Chevy Express passenger van, the Dodge Challenger, the Audi A4, the Ford Crown Victoria and the Ram Truck 1500, just to name a few, are all flex fuel vehicles.

The West Virginia Legislature caught its mistake earlier this year and changed the law.  Ironically, news coverage of the Legislature’s rollback of the costly and ineffective tax credit alerted dealers and buyers to the program, generating a rush to take advantage of it.

It was an irresistible pitch:  up to $7,500 off the taxes you owe the state just for buying a loosely-defined alternative fuel vehicle that burned regular old gasoline, and not natural gas. Additionally,  the credit could be spread over several years for those with insufficient tax liability to fully consume the tax credit in one year.

State Deputy Revenue Secretary Mark Muchow says it has cost the treasury $30 million to date in alternative fuel tax credits for tax year 2011 and 2012, but total claims for sales between January 2011 and April 14, when the program expired, could reach $100 million.

“Flex fuel vehicles are widely available and ultimately that became a budget problem,” Muchow told Metronews.  “Very little credit has actually gone out to natural gas vehicles, but about 95 percent of the cost so far (of the tax credit) has been for flex fuel vehicles.”

The surge of applications for the tax credit before it expired has contributed to a significant drop in personal income tax collections, which resulted in the state missing revenue collection estimates for the first month of the new fiscal year by $18 million.

West Virginia still has a tax credit for natural gas powered vehicles.  Even that is questionable because of the inherent economic unfairness of the government favoring one industry over another.

At least the ill-conceived flex fuel credit is gone, but not before costing the state millions.

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Comments

  • hillbilly

    Your wonderful democratic government yesterday stole $5,000 from the taxpayer's yesterday for each Chevy Volt sold . Now the $90,000 car will only cost $35,000 , the other $65,000 will be picked up by you . The uaw always gets their man !!!!!!!

  • robert hamrick

    this is the problem with one party rule. this is what happens when legislature members think they are smarter than you, yet they dont know squat. even so called journalist, instead of doing real journalism, are just taking it as fact because they believe in the same cause-misery!!!. it sells papers and make people dependant on govt.

  • mamasita

    So, anyone know where you can purchase a Nat gas powered car?
    Honda makes them, but I recall reading they are only available in CA.

  • bulldog95

    Anyone wanna take a bet that due to this mess that there is a new tax to make up for it? I am betting they revisit the registration/license fee. They talked about increasing that garbage last year, I bet it gets rammed through next time, all in the name of cleaning up this mess because there were cuts to the DOH to make up for the tax credit.

    • GregG

      Oh you can bet your sweet............yea there we be a plan to offset the loss. And I will promise you that it will fall on the backs of the working middle class.

      • mntnman

        They are going to have to make up revenue somewhere. So it will be on "fees"; they don't call those taxes.

        A rose by any other name...

  • GregG

    Now I'm all for looking at the "big picture". Let's look at how our government is continually handing big business taxes breaks, loopholes and subsidies. Let's look at the amount of wealth that is being hidden in offshore accounts in order to avoid paying taxes. Let's look at the trillions of dollars of wealth in cash and property held by organized religion that goes un-taxed. Yea, I'm all for looking at the "big picture".

    • Shadow

      when I read your comments, I think there is only to kinds of businesses, Mom & Pops and Big Box. One is good and the other is bad no matter what it does.

    • mntrbob

      GregG, even though you knew I was referring to these individual programs rather than the larger tax structure, it still didn't stop you from getting on your soapbox again.

      I consider you more of a 'small picture" kinda guy.

      • GregG

        When I see our nation and our state swimming in a surplus of budget revenue then I will change my view. But until that time, I will stand firm in my opinion that big business, the rich and organized religion is the cause of our poor economy. It doesn't take a wide angle lens for me to see the long term effects of Reaganomics. We are living it.

        • mntrbob

          GregG, I would think you would applaud most churches as they are helping the less fortunate and middle class families who are struggling. Most churches are not swimming in a sea of excess cash.

          Now let's say churches were not exempt, would the government really be able or willing to provide all the items that churches do.

          If that happens are your willing to come to my church, serve over 20,000 meals each year, bring a few coats or shoes, do a few oil changes or repairs to cars? No worry the government will be able to take care of everyone just because churches are not paying their fair share.

  • bulldog95

    Its after 11 am and there is no post from TD blaming this on Bush or the tea party. Is TD on vacation?

    • GregG

      If it helps any Bulldog95, I'll blame Reagan. After all he is the one that handed big business the keys to this country. And they have been driving us down the road of economic destruction ever since.

  • mntrbob

    “The moral of the story is that you need to know in some detail the nature of the economy you’re serving when you fund job training efforts.”
    - Mark Muro, Policy Director, Metropolitan Policy Program at Brookings

    This in response to a GAO audit that determined that the 500 million dollars spent on green job training was only able to place 55% in green jobs, many of of those not what you would consider a green job.

    As with the above commentary this is another case of not looking at the big picture

  • mntrbob

    Just a guess, but I would think the purchase of many of these higer priced vehichles would not be by the individuals that are truly in need of some real relief.

  • mntnman

    It was a tax break -- I thought you loved tax breaks Hoppy? Hmmm. I guess you want to pick winners and losers for tax breaks.

    • Hop'sHip

      I believe Hoppy would tell you he is against all tax expenitures and would eliminate all of them and substitute a low flat tax rate, eapecially since his mortgage has been paid off, his retirement has been fully finded, and has kid is out of college.

      • Hop'sHip

        4 typos in one comment. Might be a record. I will send myself to the penalty box.

    • bulldog95

      Well I bet you feel all clever and got your jollies for the day by your little comment didnt you?

      By your normal well thought out posts I can tell that you are smarter than this and you know good a well that there is a difference between a tax credit and a tax break.

      I think the bigger story that Hop eluded to is that all these "flex fuel" cars were sold and when was the last time you saw a gas station selling E85? I can think of none in the Putnam, Cabell, Kanawha, Boone areas.

      • Hillboy

        Yes, I was half kidding. As a tax break, it obviously isn't fair because it's going to many people who might not need it and nothing to people who happened to buy a non-flex-fuel car. As an inducement to use alternative fuels it is obviously a failure because there is no way to verify that those people who bought the cars will use flex-fuel, assuming it is even available.

        However, I stand behind my comment that if a tax cut is revenue neutral or even positive then a tax break should be too. There should be no reason to have to make up the lost tax revenue unless you doubt that tax cuts are good across the board. Why should there be such a stark difference between a tax cut and a tax credit?

        • bulldog95

          So mntnman moonlights as hillboy?

          • Hillboy

            my fault bulldog, I got confused about where the thread was going. Mntnman and I were making the same point on this one but I wouldn't want him to get any blame for anything I may say on other topics.

          • bulldog95

            Nope, it looks like someone hit reply and forgot to change the name from hillboy to mntnman.

            My response was to mntnman and then hillboy replies to my post. Is someone pulling a fungo/fester/whatever because your first sentence was, Yes I was half kidding.

          • mntnman

            Reducing taxes is reducing taxes. Call it a cut or a credit, it still is reduced taxes to the taxpayer. You pay less, so your taxes are reduced.

            I just find it interesting that Hoppy is talking about government picking winners and losers with tax policy, yet that is precisely what has been done with tax law in the US regardless of who is in office or which party is in charge. (A lower tax rate on capitol gains picks a winner -- those whose primary source of income is capital gains win. Without any true benefit to the economy, truth be told. The same is true of a whole host of tax breaks to corporations and individuals,) To suggest otherwise is to ignore truth and history.

            So I say again, I thought Hoppy loved tax breaks? I thought all good conservatives did.

            As for me using a different login, no, I will always sign my comments mntnman. Its the way I roll.

          • Hillboy

            ha ha. good one bulldog, I'd never thought of that, but no. I guess you could say I'm just a hillboy but someday I hope to be a mntnman.

  • Hillboy

    It's a flawed law that should and apparently is going to be fixed.

    One thing that puzzles me though is how Hoppy differentiates between tax cuts (good) and tax credits (bad). If the conservative credo is that tax cuts pay for themselves--that is, people spend the money on consumer goods that they don't pay in taxes, which stimulates the economy, which then generates more in tax revenue than the original tax cut---shouldn't that be true for tax credits as well? Even though it obviously is a poorly thought out law, shouldn't there be some delegates saying--no matter, it will still pay for itself?

    • mntrbob

      hillboy, as I stated below there are but a few winners with this program as I would feel that those that could afford these vehicles would not be the ones that truly need a break as compared to others. But because of this the greater majority of taxpayers will have to fill the void and will include those that do not need any additional burden.

    • GregG

      That was my point when I made the "trickle" comment above. I found it humorous that here we have an example of government giving tax credits in an attempt to aid Big Business. But when all the layers were peeled away and it came to light that it was "Ol' Joe Working Man" that actually benefited from buying a flex-fuel vehicle then all hell breaks loose. Now we have gone from the old warm and fuzzy "trickle down economics " to... oh hell the state just lost $100 million due to a bunch of democrats trying to help increase the profits of Marcellus Shale. These hypocrites are rather amusing at times. To sum it up, in the conservative world a good tax cut is one that helps big business, the rich or organized religion. A bad tax cut is one that puts money back into the pockets of the working middle class.

  • ignored

    What would happen to employee's that lost their employer $30 to $100 million dollars in just about any other venture outside of politics?

    • GregG

      Well, if you were the CEO of some Big Corporation, you would get a $10 million bonus to go along with your $40 million salary. But if you were a working middle class individual you would be canned and more than likely have legal action taken against you.

      • bulldog95

        Thats the thing that blows my mind, but you are right about the big bonus to the CEO's that lost money. Just look at whats going on with Patriot filing for bankruptcy but the CEO got a fat bonus. For what, running something in the toliet?

  • GregG

    So actually what your saying Hoppy is........due to our States knee jerk reaction to kiss the butt of Big Business, ie. Marcellus Shale, we just took a $100 million screwing. SEE!!! This is what happens when government bows to big business. But don't worry, I'm sure this $100 million loss will "trickle" back to the state. At least this time it was a few of the working middle class that got to reap the rewards of our governments endless catering to big business. But I have to wonder if there was a big increase in fleet replacement by other businesses during this time period.

    • ConservativeRealist

      I am confused Greg...you cite cynicism that reflects a Democratic slant but then ignore the fact that it was Democratically controlled House and Senate that passed the bill and sent it on to a Democratic Governor to sign...

      I am forever amazed at the armchair pundits who want to blame Republicans for West Virginia's woes when it has been firmly in Democratic control for over eighty - 80 - years...

      • GregG

        We let me clear things up for you. I may be a registered democrat, but I detest this endless catering to big business. Hoppy and many others on both sides have been on the Marcellus Shale bandwagon since day one and I have said all along...........here we go again, catering to another business just like we have coal, timber, chemical etc..... And what does this state have to show for it? But if you want to put a dem/rep spin on this, I guess one could say that our dem. controlled house and senate and our dem. Governor did "throw the working man a bone", even if it was only an accidently side effect of catering to big business.

        • ConservativeRealist

          If you destest the catering to "big business", then don't complain about a lack of "good jobs" , lack of investment in infrastructure, and poor tax collections (see it is those businesses who pay the bulk of taxes ya know - B&O, Capital Gains, Coal Severance, etc.). Do you really believe that West Virginia's 1.8 million people fund its FY 2014 11.3 billion (with a "B") budget? That would be over $6,277.00 per every man, woman, and child in the State in taxes.

          The impassioned, "I hate big business..." is a broken record that reflects a complete lack of common sense and/or grasp on reality.

          • GregG

            The lack of "good jobs" and poor "tax collections" is the very cause of my distaste of Big Business. ( Recent prime example is Patriot Coal and their actions.) In my world considering the economy I have a big problem with any business that makes record profits, can spend millions on a CEO's salary and benefits, spend millions more on lobbyists to further pad their profits, and all the while taking advantage of every tax break, loophole and subsidy their bought and paid for politician can provide them. Where the hell is the trickle down? It isn't in my pocket. It isn't in our education budget. It isn't in our DOH budget. It isn't providing more troopers and law enforcement. It isn't going to our Veterans. There is definitely a shortage of common sense and/or grasp of reality around here. The reality is our economy is in a mess. And common sense tells me that a government controlled by big business, the rich and organized religion is the cause of our economic hardships. And nothing makes it any more clear than when Hoppy is on air talking about "who is going to run against who" in the upcoming election. Ever notice when he mentions a persons name that it is always followed with a "they don't have the money" or a "they got the money"? That's what our government has become. It's not a government of the people anymore. It's a government whose seats are filled with bought and paid for individuals. And that too is reality.

        • Hop'sHip

          Good points, GregG. I'm registered as independent and have to admit that the one-party rule problem argument that you often get here seems to be a legitimate. But then I look at what appears to have happened with the Attorney General Office. I didn't particular like McGraw's self-promoting and thought he perhaps had been there too long, so I kind of welcomed the election of someone else to that position. But the new guy seems to believe his role is to be a tool of the Chamber of Commerce, rather than to protect the individual citizen. Now do we really believe that the Chamber's agenda had been insufficiently represented?

        • mntrbob

          According to the Book of GregG

          Big Business, Rich ,Religion = Bad

          • PnN2TheWind

            Progressives, liberals, Democrats==very, very bad.

          • GregG

            Considering the amount of power and control the three have over our government......yes, in my book they are "Bad".

      • CaptainQ

        +1

        • GregG

          Now Captain, you should know how much I hate either party catering to big business. And you should have also understood my "trickle" comment. When it's the democrats catering to big business the republicans scream "picking winners and losers", but when the republicans cater to big business it is always under the guise of "trickle down economics".

          • CaptainQ

            Perhaps I should clarify my '+1', GregG. THIS is the part I was agreeing with:

            "I am forever amazed at the armchair pundits who want to blame Republicans for West Virginia's woes when it has been firmly in Democratic control for over eighty - 80 - years..."

            Hard to argue with the truth of this statement (but feel free to try).

          • ConservativeRealist

            Again, I am confused...

            The voters scream for "job creation" and "investment" but who does that?...(crickets chirping here)...BUSINESS!!! The bigger the business, typically, the larger the investment. It is called "capitalism"...you know, economics. Why do people rail against companies being successful and turning profits? I'll tell you why, jealousy and a lack of a basic understanding of economics and the economy works. Granted the system is not perfect, but many of those who are feeling, "left out" are those who chose not to further their education and or obtain marketable job skills and are waiting for their "benefits" to be handed to them on a silver platter becuase they have a sense of "entitlement".

            I started off working at age 16 and have never collected unemployment. I have done some pretty crappy jobs but I worked my way through college and graduate school to obtain a career. And I did it all without an "Obamaphone"...

  • Hop'sHip

    Hoppy,

    Do you have any reporters there who might investigate how flex fuel vehicles got included? I realize that's not nearly as much fun (and a lot more work) than bringing out your tired old "picking winners and losers" cliche. But I think it might serve to inform, which I believe to be the purpose of the "news" media. Maybe you should change your name to WVMetroTwaddle

    • PnN2TheWind

      Osama bin Laden is dead and GM is alive.
      "al-Qeada is on the run," said Barack Hussein Obama.
      The US closes 25 embassies across the Arab world under an al-Qeada threat.
      Wait. What??
      Another Obama delusionment.

      • Hop'sHip

        So bin Laden isn't dead? He is just creating havoc under a different name? Sort of like Fungo?

  • Wowbagger

    Hmmm...

    This is one of many examples of a predominantly one party system and mindlessly voting for a familiar name with no regard for their record. The Captain mentions several others above. A little competition tends to kill off hare brained schemes like this one.

  • CaptainQ

    Why am I not surprised at this development, Hoppy? Add the Alternative Fuel Motor Vehicles Tax Credit to the growing list of government actions with good intentions that turn out to be huge mistakes. There are times that our WV lawmakers resemble 'the gang that can't shoot straight.' This isn't the first time and it sure won't be the last time that those serving under the Capitol Dome goof up. Remember the 80's? The Tree Tax? The Dog Tax? The Roadkill Bill?

    No wonder many people (both inside and outside this state) think West Virginia is a joke!

    • Hop'sHip

      Q: To be honest, I don't remember the tree tax, the dog tax and the roadsidekill bill. Were all these enacted or just something some goofy legislator's proposed, like these bills to outlaw sharia law that we get in state legislatures throughout the country?

      • CaptainQ

        Glad you asked, Hops'hip!

        If memory serves, both the Tree Tax and the Dog Tax was passed by the WV legislature in the same year. No, I don't remember the exact year, but I DO recall both happened when Gaston Caperton was Governor (surprise surprise).

        The Dog Tax was an attempt by the WV Legislature to regulate so-called 'puppy mills' by adding an ADDITIONAL tax (on top of typical county licensing fees) for them. However, the way the bill was worded and then passed (rubber stamp style), it basically imposed that additional tax on anyone in the state who owned more than three dogs. This caused quite an uproar with dog owners, and, to their credit, when the Legislature realized their error, they corrected it.

        The Tree Tax had less than certain origins or intentions. I believe it was billed as a 'conservation measure' but the way it was worded, basically forced all property owners who's land was covered 50% or more by trees to pay an additional tax. The odd thing about this tax was it's very uneven application. For example, a friend of mine who's house sat on one acre of ground outside of 'city limits' was assessed the Tree Tax since it was determined that his land had trees on it. What made the Tree Tax an even bigger joke was the fact the law lacked any enforcement mechanism. There was NO legal penalty (nor collective recourse for the state) for anyone who refused to pay the Tree Tax (as many folks did). When lawmakers found out how flawed (and ridicious) this law was, it was also rescinded.

        The Roadkill Bill, to the WV lawmakers credit, as least DID have some justification behind it. This law that basically allowed anyone who struck and killed any non-livestock (aka wild) animals with their vehicles to harvest the meat from them for personal consumption was already on the books in a number of states in America (including Kentucky and I believe Tennessee). BUT when WV passed the Roadkill Bill, it instantly made the Mountain State a target for late night comedians and an object of ridicule by both branches of national news media (Main Stream Media, Right Wing Media). Bottom line on the Roadkill Bill, it was more a national embarrassment for the state than it was bad legislation.

        Does this help, Hops'hip?

        • Hop'sHip

          Thanks Q. That was informative. But I don't think not getting everything right the first time is a problem exclusive to government. And I think the proper response is to correct what is wrong and move on. I didn't realize all that embarressed West Virginia. When I hear snarky remarks made about West Virginia from out of state, it is usually directed against the people stereotype and not the government. As a dog lover, though, I do wish there was something we could do about puppy mills. I appreciate the attempt. Thanks again for the info.

          • bulldog95

            Only the governmnet usually gets nothing right on the 1st try. But I agree, lets fix government and move on.