Surprise! There’s A Cash For Clunkers Tax
Posted on August 27, 2009
Today’s theme is brought to you by the word “consequences.” When dealing with Democrats/liberals/progressives, there are always consequences, the majority of which were never considered when calling for and/or implementing legislation/plans. Another case in point (h/t Blogs For Victory)
The Cash For Clunkers program is adding to the activity at treasurers’ offices all around South Dakota. First, people were asking for proof of ownership, so they could show they owned their vehicle for a full year, allowing them to cash it in. Now, they’ll be returning to register their new vehicle. And when they do, new owners need to bring every bit of paperwork provided to them by their dealer.
“That means they need their title, their damage disclosure, their bill of sale and the dealers have 30 days to get that to them,” Minnehaha County Treasurer Pam Nelson said.
But many of those cashing in on the clunkers program are surprised when they get to the treasurer’s office windows. That’s because the government’s rebate of up to $4500 dollars for every clunker is taxable.
“They didn’t realize that would be taxable. A lot of people don’t realize that. So they’re not happy and kind of surprised when they find that out,” Nelson said.
Surprise!
On the front end, CFC sounded great. Stimulate people buying auto’s in the private market by offering rebates, because money circulating in the economy is a good thing. Though, of course, Dems linked this with AGW and made people purchase a more fuel efficient vehicle. You know, a Hummer to a Dodge Ram. But, alas, the consequences rear their ugly heads
- people have to pay tax on the rebate
- fewer used vehicles, meaning fewer cars on lots, meaning fewer sales, meaning less commission for the sales people and dealerships
- fewer used vehicles, which harms the middle and lower classes who would typically purchase them
- Dealers not getting their money back because of burdensome and onerous government paperwork
- less money passing through the economy because there are fewer used cars to sell
What are some of the others y’all can think of?
More: here’s another consequence. The top 10 cars destroyed under CFC are all American brands. What do American auto parts makers and sellers now do?
Double more: I should point out that the CFC program prohibits the rebate from being added to your federal tax return, and some States make heavy use of the adjusted gross income number from said federal return. North Carolina does. However, States can still consider the rebate taxable income, as can local government. Not to mention that the car dealers can be hit by states saying that the rebates are taxable income. Also, there could even be a taxable gain if the rebate is worth more than the value of the traded in vehicle.
People also had to pay sales tax on the rebate, depending on the locality. Even the Feds have no idea whether a CFC purchaser will have to pay state or local taxes.
Crossed at Pirate’s Cove
» Filed Under Anti-Capitalism, Delusional Dupes and DUmmies, Democrats, Dems In Charge: Now What?, Economy, Nanny State, News, Taxes, bailouts, economic stimulus
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18 Responses to “Surprise! There’s A Cash For Clunkers Tax”
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It seems to me that destroying the cars is just throwing away good money or at least something a poor person could use. Whatever happened to reduce reuse recycle?
That is all secondary to liberal intentions, James. Consequences schmontesmenses.
This is false.
http://www.cars.gov/faq#category-06
Expressly in the language of the law, the 4500 credit is not taxed as income. Please don’t spread misinformation, or at least clarify your post.
-M-
Sorry Marco, but you are wrong. Your reference only applies to Federal income tax. The discussion here about whether the rebate is taxable relates to State and local taxes, not Federal taxes. The $4,500 is part of the purchase price of the new vehicle so almost all localities are going to treat it as a taxable part of the transaction when you apply for your new license plate or to transfer your old one. Guess Teh One isn’t the only person who doesn’t get that, huh?
Marco, check the “Double More” part at the end of the post, which clarifies.
I’m somewhat to the Right of Attila the Hun, but this kind of stuff isn’t helping convervatives.
Even if a State decided to include $4,500 into income, it would have to be reported as a sale of your used car. You would be able to deduct your cost, and since you generally don’t depreciate autos used for personal reasons, it’s more likely that the cost would be more than the $4,500 received in trade. That would result in a loss, which would be classified as a Personal Loss, and would not be deductible.
So even if they wanted to include it in income, most people will have sufficient basis in the auto traded in to wipe out any gain.
Lets break this down. Tens of thousands if not hundreds of thousands of perfectly good cars are destroyed. The Govt. hands out our money so people will buy American Cars, which doesn’t happen, so Japan, China, Korea all get there economy’s stimulated with our tax dollars and the Democrats call this success. Mean while the Car Dealers have not been paid and can now stand in line and wait for their money, Good Luck with that one. And no doubt you liberals out there think all is good in your little utopia worlds.
What about the people that found out their cars didn’t fit the criteria as clunker but still got rid of their cars. I think it was the insurance people who benefit, more insurance for newer car.
Of course the CARS money will be taxed, duh it’s income. Like all conservatives, you twist everything to the negative and distort the facts. I’m a car salesman and I can tell you that 90% of the CARS vehicles traded weren’t worth putting out a lot of any type for re-sale. They were all used up. The junking of these cars will not affect the used car market one iota. Get real. This article makes you look like a conservative, reactionary dim wit. Oh, I’m sorry I forgot conservative and reactionary dim wit are synonymns.
First of all, Stephen = idiot.
Second of all, I know plenty of people who are struggling to get by who would benefit immensely from one of those cars that were “all used up”. Proof positive that Democrats don’t REALLY want to help the poor, or else they wouldn’t be paying people to destroy cars that impoverished people would benefit from. Remember, the Democrats thrive on exploiting the poor. Giving them a car so that they can drive to work might actually help them out, making them less needy, which makes them less dependent on entitlement programs, which makes them less dependent on– you guessed it!– the Democratic Party.
Is anybody even fooled by their [edited] anymore? Oh yes– Stephen is. Slow clap for Stephen.
Way to go, Marco – exposed as a lefty plant.
Obama’s a complete failure.
WHAT A JOKE!!!!!!
Both political parties are a complete failures. It seems so odd that Americans can forget the ills of a past administration to open up for the ills of the present administration. Both the Bush and Obama Administration–most Administrations have problems.
One cliche holds strong today in American culture and those who complain without resolution need to recognize it: “Those who aren’t part of the solution are part of the problem.”
Government is trying to “jump start” the economy through stimulation of new car sales. Cash for clunkers got rid of inefficient, older model used vehicles. To those who speak of recycling for poor, do you really feel that continue the use of 12/18 MPG equipment is going to ease US consumption of foreign oil? Do you feel that poor people can continue to afford increase gas per gallon fees/expenses?
The government taxes everything. This is a reminder that we are in a fre”er” society. Those civil liberties, etc you pay for. If you dont like it, go live in China. I did for two years. You will see the difference. (While the people are very honorable, friendly and proud, you will see many issues in the areas of healthcare, representation, product quality, company fairness, etc) Again, if you’re not part of the solution, you’re part of the problem.
To the author, indeed, there are less available used model cars. However, that hasn’t decrease the overall inventory of used vehicles. Do the math, one in one out. Please use common sense when doing calculations logic. If you wish to promote such propaganda, you had better move to a country which supports such motives.
Very lastly, Americans, we, our government, owes a lot of money to a lot of people. Our civil liberties we have are not a free meal ticket. We need to pay for them. It’s time for America to step back up to the plate and prove its a viable world economic contribute–not just a consumer. And, the next time you pick up your paycheck or see the balance on your direct deposit, ask your self what can I do more to deserve this check? There are people around the world who are willing to do your job for a fraction of that balance. Moreover, there are the majority of Americans ready to consume those goods and services at a lower cost.
What did you to today to help solve the American Economic Crisis? Moan? Complain? These aren’t the attributes or traits of Americans. These are the attributes of failures. Are you a failure?
This is misleading. States rule, but generally you will not pay income tax on the $4500 clunker cash. Republican spewing again.
The “tax ramifications” are only a SMALL part of it, but I feel it should have been explained BEFORE the people invested in the new vehicles. Instead of destroying the clunkers, couldn’t they have donated them to “Father Joe’s” for people that actually DON’T HAVE or CAN’T AFFORD to BUY a car? At least they MIGHT be able to afford gas (evan at todays prices) whereas they CANNOT afford a car – MUCH LESS A NEW ONE! How many jobs will be lost by the foreign market share increase and American share decrease? I guess that means that the auto manufacturer bailout was more of a bust than we thought, after all – they come up with this “great idea” for clunkers after HOW MANY DEALERSHIPS GOT SHUT DOWN! What it really boils down to is “THE MORE GOVERNMENT CONTROL – THE MORE IT WILL COST US”. Maybe his name should be Adolf Housaine Obama.
Extra taxes, removing a product that could be sold to those with less money AND generate money for SOMEBODY’s business.
Congratulations! Y’all are getting EXACTLY what you voted for.
I am certainly glad there are still intelligent people in the United States. The only problem is they are, indeed, in short demand.
People, start thinking long term instead of short term. Giving some one the ability afford today and potentially not tomorrow is just pointless. For those who agree with such negativity comments, open your wallet, pull out your credit cards, and continue to spend America into further debt and disgrace.
Don’t live beyond your means. That includes car dealerships, home owners, government offices, and manufacturers.
We saw what happened with subprime. Now, what happens when you give an automobile to some one who MIGHT be able to afford the costs of ownership?
I am very, very worried with the attitudes reflected in this forum. As people begin to argue such stances on very faulty foundations, other nations will gain where we choose to argue, bicker, and complain. Why not move to a progressive nation rather than to a nation of bitching and moaning?
And, curious more government control costs more money? Seems to be the OPPOSITE way around. China government has the most bureaucratic, largest government in the world.
Which country has the second largest currency reserves, which country has the first in terms of growth GDP, and which country has the largest ownership of T-bills?
Think again…..