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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: gagrice (Nov 01, 2009 5:23 pm) Typical Fed/State Marginal tax rate 25% Typical Fed/State Business tax rate 30-40% Good response. Does he really think that the average Joe working at the local Chevy dealer will pay a dime under the marginal tax rate? Does he really think that any of the domestic automakers are going to pay a dime under the 30-40% business tax rate? News flash (on CNN if you prefer): 98% of car salesmen not selling something from Italy or Germany won't have to worry about the 25% marginal tax bracket this year. Many car dealers have trimmed back sales staffs because they're tired of watching them twiddle their thumbs. As to the business tax rate, all of the automakers and most of their dealers are awash in a sea of red ink. 30-40% of profit equals zero tax revenue.
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Replying to: vinnyny (Nov 01, 2009 6:40 pm) He wants it both ways. He admits that most of the buyers were well heeled paying cash. other than tax in states that charged tax on the credit very little went to the states. In CA for example none of the C4C money is subject to sales tax. So CA will receive LESS in taxes as a result of the C4C Federal handout. And in most cases collect less in gas tax from the newer more efficient car. A big loser for most states. And those are the facts. The "cash for clunkers" program, which kicked into gear over the weekend, is raising a couple of taxing issues for potential car buyers. The program can lower the price of a new vehicle by $3,500 or $4,500, depending on the improvement in fuel economy versus the vehicle the buyer is trading in. Which raises the question: Are state and local sales taxes applied before or after the price reduction? After, according to state tax officials. That would result in additional savings. For example, in Los Angeles, where the sales tax rate is 9.75%, lopping $3,500 off the purchase price of a vehicle would save a qualifying buyer $341.25 in sales tax.
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Replying to: vinnyny (Nov 01, 2009 5:10 pm) The chart on that link shows that GM and Ford got 32% of the clunker sales. Not exactly a loss. Back to the per car cost, here's a story about a Delaware study stating that the Cash for Cunkers cost was approximately $2000 per vehicle. This one factors in mpg. (Green Car Congress)
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Replying to: steve_ (Nov 01, 2009 7:11 pm)
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Replying to: gagrice (Nov 01, 2009 7:19 pm) It's a "better" number than Edmunds' $24,000 at least.
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Replying to: steve_ (Nov 01, 2009 7:28 pm) Edmunds.com analysts predict that August’s Seasonally Adjusted Annualized Rate (SAAR) could be just over 13 million, this year’s highest by far. However, a week-by-week analysis reveals that this summer has been the industry’s most volatile period in history, due to the government’s Car Allowance Rebate System (CARS), also known as Cash for Clunkers. “Cash for Clunkers sent the sales rate on a wild roller coaster ride,” said Edmunds.com Senior Analyst Jessica Caldwell. “The SAAR surpassed 19 million in late July, bounced around in the 15 million range early in August and has fallen to around eight million currently. Ending August on such a low note does not bode well for September.” I don't think anyone in their right mind would try to say C4C did not have a strong impact on Vehicle sales while it lasted. I just believe the negatives outweigh the positives by a large margin. Way less than 1% of the population was a beneficiary of the rest of US.
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Replying to: gagrice (Nov 01, 2009 7:07 pm) Actually, it's not even that. The Government just creates the money and makes it on credit. No tax dollars actually spent(though the value of the dollar lowers in response a tiny bit) |
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Some of the positive spin by your friendly local car sales people within this thread is bordering convincing, the folks who buy into the spin are the same folks who have gotten us into the mess we are presently in. I do admit the tax dollars covering this scheme along with the vast moneys eventually required to fully administer the whole thing is but a drop in the bucket. THE BIGGER PICTURE is what we need to focus on! We've allowed ourselves to believe in perpetual prosperity while watching the countries unchecked levels of depth get pushed out infinitumly. The talking heads need to be ignored and common sense must prevail. All of this bail-out money was/is needed, YES! Unfortunately it's not just required as a temporary stimulus injection, it's put in place to keep the house of cards from totally imploding..........I've been called a neocon, doomsdayer and much worst, so be it. As long as I avoid Mr kool-Aid drinker, all's well. BTW, C4C's as been a great success for my family. Our 200,000 mile Buick which was purchased with cash(savings) 9 years ago needs to be retired, Now we're shopping for a new ride with cash(savings) in hand but of course no deals to be found in my neighborhood, all dealers are flush at the moment and want sticker for their cars.
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Replying to: kdhspyder (Nov 01, 2009 6:30 pm) 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. Everybody that buys a new car for $30K is going to go out and accessorize it? Right! 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 Or, maybe they took the money and paid down some of their debt. That's as good an explanation (guess) of where the money went as yours.
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Not everyone is exuberant about money wasted on failed government welfare programs like C4C 
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