Senator Proposes Tax Incentives on New-Car Sales

Senmak

U.S. Sen. Barbara Mikulski, D-Md., announced new legislation today intended to stimulate new-car sales. Her proposal would allow new-vehicle buyers to deduct the interest of their auto loans and any sales or excise fees on the sale from their income taxes. The plan would cover all new-car and truck sales from today through Dec. 31, 2009. 

According to the senator, a family would save $1,553 on a $25,000 car under the plan. The deduction would be limited to families earning less than $250,000 and individuals making less than $125,000.

While the idea would certainly be welcomed by most new-car buyers, it may not be enough to lure people into showrooms during a down economy. Of course, on top of other incentives we’ve been seeing lately, it could just add to one of the best buyer’s markets in recent history.

What do you think? Is this a good idea, or just more government handouts? Should the government focus on helping the industry directly?

Pelosi's Auto-Rescue Plan Sets Up Clash With Bush
(Bloomberg)

By David Thomas | November 12, 2008 | Comments (14)
Tags: In The News

Comments 

Bad Angus

My 02: This is just a distraction and a band-aid that won't keep the economy from bleeding to death. Gov needs to prop up/save the US OEMs with direct intervention AND fix the broader housing and unemployment problems.

As long as people are underwater in their houses, unable to sell/buy houses and not getting a paycheck, you can offer all the incentives you want on new cars and they still won't sell.

segfault

I bought a house in 2007, have made all the payments, and am not eligible for the new bailouts or incentives that have been given by the government. I bought a car last month (after the financial apocalypse began) and would not qualify for these proposed incentives.

For what it's worth, I don't think we need any more bailouts.

Bowrider

I don't think the incentives are a bad idea. It's a roundabout way of helping the 3 domestic manufacturers without direct intervention, which amounts to socialism. However, if the gov't truly wants to help C, GM, and Ford, they should somehow intervene with the UAW. Not sure how it can be done, but without the ability to shop for labor on the open market, the aforementioned are doomed.

valero

Nowhere does it say domestic autos.

These incentives would more likely drive people to buy Hondas, Toyotas and Nissans over an offering from one of the once big three.

More dollars to the deficit.

J

More bogus legislation. Why do we have to pay for years of mismanagement?

Zerf

More debt as if we did not have enough. People are not buying cars because they do not have the money. They need help getting jobs not in buying new cars. If they had a better source of income people would be buying cars. This is a waste of time and money, typical govt.

ziggy

I liked it when we used to be able to deduct the interest from auto loans. It does lose it's intention of helping the Big 3 but would still boost the economy. Unless people go out an buy cars they can't afford and then we have another crisis on our hands...just kidding.

Tony

I would just let it go in a natural capitalistic way. GM, C, F close doors - fine. May be the people who will buy the factories, equipment will make a new business and will finally turn profit. Not that we don't have cars if these 3 go. Jobs? Re-training. We need nurses!

JimC

Bad Idea!

This is a terrible idea! The Senator wants to incent people to borrow more money. Isn't that how we got into the current credit mess, telling everyone they should buy a house, even if they can't afford it.

It makes a lot more sense to spend the money for incentives to get them to buy cars that get over 30 MPG. That is something we want people to do, not go into more debt.

When I saw the headline, I assumed it would be a Senator from MI, but she's from MD.

JimC

Bloke

This is nothing new. It was attempted before and did not pass. I do not see what the goal of it is right now or back then. The last thing we need are general deductions for any kind of car or truck. If this were targeted to hybrids or certain mileages I'd be more for it. And even then if it is geared towards helping the US industry it might as well be a credit for those who buy cars that are assembled in the US or contain a certain number of parts from US companies.

David

What we need is a newly modified Sec. 179 to allow businesses to deduct auto purchases in year one - we had this for years on 6,000 LB trucks and SUV's and it helped put millions of them on the road.

As a businessman I can buy a truck with a 6' bed and expense the first 25k in year 1 - but if I buy a car - I can only expense $3k or so each year. Its crazy - thats what accountants and lawyers are all tooling around in Escalades! and its why the porsche cayenne weighs in just over 6,000 lbs. There would never have been a porsche SUV if not for Sec. 179!

David,
Or probably a Hummer H2.

DonB

I'm not sure if this is the right place for this post. But I believe the biggest problem at the Big 3 is the people running them, except maybe Mulally. GM management was very aggressive at exempting SUVs from mileage regs. They made their SUV-lined bed, and now they're lying in it. Nardelli was given $200 million to leave Home Depot after he badly damaged them. He's now doing the same to Chrysler. At least Mulally is trying to get Ford's better European products into the US, and they're building better quality, more innovative cars. I started wanting to aid the Big 3. But the more I think about it, the less I think it would really do any good!

Rex

@DonB
Great Comments.

@David
You're right. A law or incentives to buy more fuel efficient vehicles for business or personal use would be great.

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