Missouri’s Tax Break for American-Made Hybrid Cars

It is true that the United States has come late to environmentalism (and still has a ways to go). Nonetheless, even in the “heartland” we are starting to see the beginning of a Green Revolution. But, with these positive moves there is always the danger of populist protectionism rearing its head.

This week the Missouri Legislature is debating a Bill to provide incentives for the use of environmentally more friendly automotive technologies.

HOUSE BILL NO. 1326 (94TH GENERAL ASSEMBLY)

“For all tax years beginning on or after January 1, 2008, any taxpayer who purchases a qualified hybrid vehicle manufactured in the United States shall be allowed to subtract from the taxpayer's Missouri adjusted gross income to determine Missouri taxable income, for the tax year in which the taxpayer purchases the vehicle, an amount equal to two thousand dollars or ten percent of the purchase price of the vehicle, whichever is less.” (emphasis added)

(Full text at http://www.house.mo.gov/billtracking/bills081/biltxt/perf/HB1326P.HTM)

The AP, surprisingly covering the issue, noted that the “limitation was approved after Democrats criticized the bill for about an hour, saying it would use state money to encourage people to buy foreign vehicles.” One of the Democrats opposing the tax break’s application to foreign cars said that “job outsourcing has hurt the state's economy and has made it harder to find well-paying manufacturing and other blue collar jobs. . . . If a baker bakes a loaf of bread and he can't even afford to buy his own product, we've got a problem," http://biz.yahoo.com/ap/080311/mo_xgr_hybrid_tax_breaks.html?.v=1)

Needless to say this presents some interesting IEL issues! I will report back to the Blog any further developments with this Bill. (Thanks to Simon for the AP link and to one of my students for alerting me to the pending Bill.)