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Automotive News & Views Cash for Clunkers - Good or Bad Idea?
4110 messages, Last post on Nov 23, 2009 at 11:42 AM
You are in the Automotive News & Views Forum. Your Hosts are steve_ & claires
For questions about how the program works or to discuss program details, please visit our discussion titled, "Cash for Clunkers - Does it Work for You?"
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Replying to: houdini1 (Nov 01, 2009 1:52 pm) Facts are the only arbitors. So far no one except Edmunds in its flawed article has attempted to bring out any facts to dispute that C4C did exactly what it was planned to do....and that it was a phenomenal success in doing that. All the the complainers are simply exhibiting hand-wringing sobs and fears of some unknown boogeyman. That's also called being paralyzed by fear. Bring facts to discuss, facts are your friend. Otherwise continue to hide under the covers.
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Replying to: gagrice (Nov 01, 2009 1:57 pm) Oh really? Well my fearful interlocutor where did that money go then? Was it set on fire? Was it buried in the back yards of UAW members all across Michigan? Did it end up paying some Wall Street banker his bonus? You've got lots of fears but no facts to back them up. Where did the money go? Here I'll help you. 690,000 vehicles in the program Typical selling price ~$20000 per vehicle Typical rebate to the buyer $4000 Typical state sales tax rate 5% Typical Fed/State Marginal tax rate 25% Typical Fed/State Business tax rate 30-40% So where did the money go? It's pretty obvious if you understand the business and a little bit of accounting. Facts...keep it to facts, not fears. Facts are your friends.
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>Fox News and Edmunds would lead you to believe that 'the car companies' were the beneficiaries of direct subsidies from the US Treasury. The car companies and their sales units benefitted. The money the dealers made selling the car for which they had already paid went into their pockets and to order replacement cars from the CAR COMPANIES (unless they bought them from CNN and ABC Nightly News which apparently are the only correct news reporting agencies? grin?  _) It's nice we have someone to try to catch us on each detail of our posts. Were it that I weren't so lowly ignorant . If BO isn't around to help straighten things out, it's good to have someone.
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Replying to: kdhspyder (Nov 01, 2009 3:57 pm) You are fond of saying the car companies didn't get any of the CFC money. When your Chevy dealer ordered up some cars to fill the empty space on your lot and you paid for them, who did you pay the money to? And, where did you get the money? (see post #3965) This program was a sop to the unions at the car companies, in your case GM. All of the paragraphs you have pounded out in defense of CFC were pure sophistry. Happy you made a few extra bucks. Write more after the Oct, Nov. and Dec. sales numbers come out. Must admit, though, it's been a hoot, Regards, DQ
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YES, better gas mileage results from trading in a clunker for a new vehicle. I do believe studies have confirmed that average Joe driver does accumulate more driven miles when driving a more efficient ride! YES, the crazy millions pumped into the scheme gives you a short lived boost. Talk to me in 10 years when the up front crazy millions are added to the back end loaded crazy millions required to manage/process/pay interest for this brilliant government run plan. A riddle for yas, what's the process called when one goes from full blow capitalism to socialism........"DENIALISM". I've said enough, I need to continue searching for me first home which will bring me $8000 in tax breaks next year. |
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Replying to: steve_ (Oct 30, 2009 7:27 pm) That depends on how you count the cars. The feds did it differently than Edmunds did. More people bought a Focus than any other sedan for example. I really don't get your argument. Using Edmunds' numbers, 4 of the top 10 cars sold were from domestic manufacturers. 3 of those 4 were already among the top ten sellers and the other made a leap of 2 spots to make the cut. The other 2 vehicles actually moved down the list. All 10 top C4C trade-ins were domestic vehicles. How was this a win for US manufacturers?i>
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Replying to: kdhspyder (Nov 01, 2009 4:06 pm) Typical Fed/State Business tax rate 30-40% Let's examine these two facts you are so proud of. How many car agencies will show a profit and pay those taxes this year? It is not based on a good month of government stimulated sales. So if the average store sold 100 cars in the clunker program of which they received $400,000. Would you like us to believe the paid about half that in taxes? I did not think so. In this economic climate I would guess that maybe 5% of that $3 billion ever gets back to the states. You keep leaving out important facts. Like subtracting the sales that would have been made without wasting tax dollars. By your own admission you saw many savvy buyers that took advantage of the program. Like my cousin with his old POC van that was parked with reverse gone. He took advantage of the ignorance that this bailout provided. Figuring he was going to pay for it in the long haul one way or the other. People that think there is a free lunch like to gloss over the fact that someone paid for that lunch. |
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Replying to: kdhspyder (Nov 01, 2009 4:06 pm) 690,000 vehicles in the program Typical selling price ~$20000 per vehicle Typical rebate to the buyer $4000 Typical state sales tax rate 5% Typical Fed/State Marginal tax rate 25% Typical Fed/State Business tax rate 30-40% OK, I follow items 1,2, and 3. Sounds like you're saying that $1000 of the $4000 got returned to the STATES in the form of sales tax, right? The feds saw nothing of the $4000/clunker it laid out. So the fed (taxpayers) are still out $4000/clunker deal. You've lost me on items 4 and 5. Since the $4000 rebate is not taxable income, how is that affected by the marginal tax rates? If the dealers took out a loan (which seems to be the case) to purchase those vehicles from the manufacturer in the Jan-May time frame, then the selling price of the vehicles (minus some profit, of course) went towards paying off the loan the dealer used to get the vehicles in the first place. The business marginal tax rate you mentioned only applies to profits, not gross income.
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Replying to: newdavidq (Nov 01, 2009 4:25 pm) If you want to know where the tax credits went breakdown a typical sale and follow the money. It's easy. None of it went to an 'auto company'. |
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Replying to: srs_49 (Nov 01, 2009 5:34 pm) But we were not the only ones benefitting. All the aftermarket employees benefitted by the extra business. All the banks benefitted from the extra business. All the managers and the owners benefittted from the extra business; c.f. Michael Jackson, CEO of AutoNation and his comments about C4C. This extra income to the auto retailing side of the auto industry did not come free. Immediately Uncle Sam and the respective State taxing authorities were right there to get their part of this windfall. We never saw it. Right back to the US Treasury. On the Sales Tax side. I view that as an indirect pass-through payment from the US Treasury to each of the states. Roughly $700 million was never seen by anyone. On paper the $4000 credit went to the buyer at the time of purchase; but those buyers never saw any of it; it all went to the dealers that held the inventory; but immediately within 4-5 days roughly $1000 was sent to the local state General Fund in the form of sales taxes. The transaction price was $21000 including vehicle and taxes. The buyer only paid cash or borrowed $17000. So what happened to the $4000? Follow the money. This is easy, if you know the process. On a $20000 vehicle the dealer paid the vehicle maker about $17000 when it was shipped. Probably that dealer financed the purchase through his bank so the vehicle maker has already been paid. The dealer though has to retire his loan(s) to the lender doing his floorplanning. Thus of the $20000 he received he has to send his bank $17000. The dealer gets to keep ~$3000. But from this the dealer has to pay all his sales managers and sales employees and all his sales overhead and mortgage and variable expenses....then himself. Of that $3000 the sales staff and managers take about $1500. The rest the owner gets to use for his expenses. This is where the tax credits were truely going. But of that $1500 going to the sales staff roughly half of that is immediately taken by the Feds and state taxing authorities in withholdings and FICA. So roughly another $800 to $1000 is immediately sent back to the taxman. This all occured by Sept 15th. This was occuring in small businesses in every city all over the country in every one of the 50 states and in multiple places in every Congressional District. Then there are all the accessories and aftermarket purchases made by those 690,000 buyers. These workers saw a HUGE bump in income meaning that the Feds and states took upwards of 50% of their gross income as well. Then there are the junkyard owners and employees that suddenly received a bonanza of nearly free parts for sale. This group was swamped. After disassembling the vehicle for salable parts they get to crush it and sell the packet to the steel mills for recycling.....and then they get to keep the money....less their taxes of course. Then....of the extra money received by all these parties consider how may dinners and presents and outfits and vacations were purchased all of which flowed downstream from this 6 week boost. It would take a complex economic model and lot of computing power to layout all the interactions from this simply program....but it seems to have worked as planned. Then there's all the money that won't be spent on fuel over the next several years by these 690,000 drivers. That money stays in their pockets and doesn't get sent to Big Oil and countries like Saudi and Venezuela. It also doesn't go toward supporting the international price of oil.
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