Quote:
Originally Posted by Rekna
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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...or we could just not have the program, let the cars live out their days as dependable vehicles, save the tax payers $3B, let the new cars get sold in a truly free market as the demand naturally exists, and leave the government out of it. You know, either way.
BTW, property tax is a county/state tax. It does not reimburse the federal taxpayer in any way. Also, since the new car has higher property taxes than the old car, the purchaser now pays for his own $4500 in federal income taxes(ultimately) and he pays more local property tax. Oh, and then there's the interest on the loan for the vehicle. The taxes for the warranty on the vehicle which is now guaranteed by the federal government. The taxes on the "we'll pay your car payment for 9 months if you lose your job" guarantee by the federal government. The taxes on the bureaucracy of federal managment of the program (beyond the $3B), The lost productivity in the government entities which now have to manage this program as well....
I think you missed a few o the taxes there.
---------- Post added at 02:27 PM ---------- Previous post was at 02:26 PM ----------
Quote:
Originally Posted by samcol
Actually I think very capable vehicles are getting destroyed. The clunkers have to be drivable, registered AND insured for the entire year to be eligible. This seems strange to not accept vehicles that don't run and aren't registered/insured, yet they will take perfectly good cars and totally destroy them. A total waste of perfectly good capital and drivable car that could have been sold to someone who can't afford a new vehicle.
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Please stop muddying the water with sound reason.