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<p>I just sent in my modest, refundable deposit on a new four-door, all-electric sedan to be built by Tesla, so I guess that puts me firmly on the green bandwagon. Unfortunately, for those of you who are curious to hear how it all turns out, the delivery date for car "#1664" is the summer of 2012. Talk about delayed gratification.</p><p>On paper, this car sounds terrific. It goes from zero to 60 in about five seconds and will go 300 miles between charges. The car will cost about the same as a higher-end SUV, but smug satisfaction plus what I save in fuel should more than compensate.</p><p>"But what about all the electricity," you ask? Not to worry, if my neighbors are an example. They just installed a solar electric system which cost about $30,000 out-of-pocket, but then they received $15,000 in tax credits. Tax credits are different from tax deductions. Tax credits are equivalent to the actual dollars you use to pay your taxes. This means that my neighbor's actual cost of his system was effectively $15,000. The other $15,000 (of the $30,000) was money that they otherwise would have had to pay in taxes.</p><p>On a $15,000 net investment, my neighbors are saving about $2,000 a year in electric bills. This cash flow represents about a 13 percent return on their $15,000 investment, but it gets better. The $2,000 of savings is an "earning" on which they don't have to pay taxes. The $2,000 of savings is the equivalent of $2,000 of additional after-tax, take-home pay</p><p>Anyone in California with family income above $80,000 or more is in a 50 percent tax bracket on the last few dollars of income. (Add up the combination of federal, state, Social Security and Medicare on your last few dollars.) It would take a gross wage increase of $4,000 pretax to generate $2,000 of additional spendable income. Therefore, the 13% tax-free "return" really amounts to about a 26% pretax return on an otherwise taxable investment. </p><p>Why is everyone hung up on the number of years that it takes for a solar system to "pay for itself." That mentality assumes that the system is worthless when the house is sold. Big mistake. It will certainly be worth something, but in the meantime, from an equivalent rate-of-return basis, it is one of the best investments anyone can make. The return is effectively guaranteed and should more than compensate for any depreciation of the system over time. It would make sense to borrow the $15,000 from a 401(k) plan to make this investment. </p><p>Combining the all-electric Tesla (or Nissan "Leaf") with a home solar system jacks the rate of return even higher. My neighbor's system develops more power than they can use, so presumably the average home system would provide enough additional power to recharge an electric car about once a week. Now, we have a system that saves $2,000 in electric bills and $2,000 in average annual gasoline costs. The 26 percent effective yield just doubled to 52 percent per year. Anyone with a sun-drenched home and 40 miles of average daily driving would be crazy not to consider this combination.</p><p>It's hard to imagine that there won't be a tipping point at which everyone realizes the financial benefit of a solar lifestyle. What most of us fail to consider is the munificence, in after-tax dollars, of this car/home combination. Some obvious products take time to catch on, (think money market funds back then or flat screen TV's today), but as popularity for great ideas builds exponentially, we can soon find ourselves thinking, "Where have we been?"</p>

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