Cash For Clunkers: An Obamanomics Lesson
Ready for an Obamanomics lesson, kids? Let’s say you traded in your clunker worth $3,500, you got $4,500 off for an in cash for clunker "savings" for a net plus of $1,000 in savings. In case you did not know, you have to pay taxes on that $4,500 by April 15th (the dealer did not mention that???). Let’s say you have a 30% combined federal and state marginal rate, guess what? You’ll pay $1,350 on that $4,500 cash-for-clunker payment.
Instead of saving $1,000, you pay net $350 to the feds. If you traded in a paid-for car , congratulations: you now have 4 or 5 years of payments on a new car; that working car you had involved less expense to run than the payments that you will now be making, even if the thing had to be repaired occasionally. It gets better, though: you also got ripped off by the dealer. Why?
Dealers were selling the Ford Focus, for example, well-equipped (A/C, auto transmission, power windows, etc.) for $12,500 the month before the "cash-for-clunkers" program began; afterward, the dealers stopped discounting them and instead, sold them at the list price of $15,500, $3,000 more than you would have the month before. Yeah, Honda, Toyota, and Kia, all bigger beneficiaries than our own car companies, played the same list price game as Ford, Chrysler, and Chevy.
Do the math: You traded in a car worth: $3,500
You got a discount of: $4,500
Net so far +$1,000
But you have to pay $1,350
in taxes on the $4,500
Net so far: -$350
BUT you paid $3,000 more than the car was selling for the month before
Net -$3,350
Add in the more taxes (ad valorem tax, state tax, registration, etc.) on the extra $3,000 that you paid for the car, along with the 5 years of interest on the car loan, but you get the idea. So who actually made out on the deal?
The feds collected taxes on the car along with taxes on the $4,500 they "gave" you. The car dealers made an extra $3,000 or more on every car they sold along with the kickbacks/rebates/incentives from the manufacturers and the loan companies. The manufacturers got to dump lots of cars they could not give away the month before. The poor, stupid consumer got saddled with even more debt that they cannot afford.
Obama and his band of merry men convinced Joe Consumer that he was getting $4,500 in "free" money from the "government" when in fact, Joe was giving away his $3,500 working car and paying an additional $3,350 plus salesand other tax plus interest for the privilege.
Think this was stupid for those who were crazy enough to swallow this wonderful scheme? Just wait until we get health care with "no additional costs" over what most of us now pay for health insurance and the best medical care in the world. Think that scheme might be designed by the same people who came up with Cash-for-Clunkers?
Instead of saving $1,000, you pay net $350 to the feds. If you traded in a paid-for car , congratulations: you now have 4 or 5 years of payments on a new car; that working car you had involved less expense to run than the payments that you will now be making, even if the thing had to be repaired occasionally. It gets better, though: you also got ripped off by the dealer. Why?
Dealers were selling the Ford Focus, for example, well-equipped (A/C, auto transmission, power windows, etc.) for $12,500 the month before the "cash-for-clunkers" program began; afterward, the dealers stopped discounting them and instead, sold them at the list price of $15,500, $3,000 more than you would have the month before. Yeah, Honda, Toyota, and Kia, all bigger beneficiaries than our own car companies, played the same list price game as Ford, Chrysler, and Chevy.
Do the math: You traded in a car worth: $3,500
You got a discount of: $4,500
Net so far +$1,000
But you have to pay $1,350
in taxes on the $4,500
Net so far: -$350
BUT you paid $3,000 more than the car was selling for the month before
Net -$3,350
Add in the more taxes (ad valorem tax, state tax, registration, etc.) on the extra $3,000 that you paid for the car, along with the 5 years of interest on the car loan, but you get the idea. So who actually made out on the deal?
The feds collected taxes on the car along with taxes on the $4,500 they "gave" you. The car dealers made an extra $3,000 or more on every car they sold along with the kickbacks/rebates/incentives from the manufacturers and the loan companies. The manufacturers got to dump lots of cars they could not give away the month before. The poor, stupid consumer got saddled with even more debt that they cannot afford.
Obama and his band of merry men convinced Joe Consumer that he was getting $4,500 in "free" money from the "government" when in fact, Joe was giving away his $3,500 working car and paying an additional $3,350 plus salesand other tax plus interest for the privilege.
Think this was stupid for those who were crazy enough to swallow this wonderful scheme? Just wait until we get health care with "no additional costs" over what most of us now pay for health insurance and the best medical care in the world. Think that scheme might be designed by the same people who came up with Cash-for-Clunkers?
posted by Lynn H. Karlet, Esq. at 6:53 PM
1 Comments:
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