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I'm not sure the program is going to cost as much money as people think.
Let's look at it from a tax perspective.
The cost of each fully subsidized purchase is $4500
There is no money generated from sales tax because that tax is deductible.
The business has to pay income/revenue type taxes on that purchase.
In addition, most consumers must pay around 2% of the cars value every year in property taxes/auto mobile fees.
For the sake of argument let's say that the average cost of the cars purchases is $25,000 and businesses pay 5% income tax.
In this case the initial purchase of the car costs and generates the following money:
subsidy ($4,500)
Business tax $1250
Yearly Property Tax $500
Thus after the first year the program is already recouped 40% of the cost and this excludes any taxes generated by income tax due to increased demand on automobiles.
---------- Post added at 06:12 PM ---------- Previous post was at 06:10 PM ----------
I don't necessarily feel we should be destroying the vehicles traded in but I think they are forcing the destruction to help prevent fraud by dealers who would then take those cars and resell them. Part of the aim of this program is to get these cars off the road. If they didn't destroy these cars we would have an equal number of people complaining about the US destroying the used car market and hurting used car dealers....
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