Author Topic: Cash for Clunkers 'Surprise' (Read 12245 times)

AmbulanceDriver · « **on:** August 28, 2009, 02:07:37 PM »

http://www.keloland.com/NewsDetail6162.cfm?Id=0,89084

Essentially, folks in Nebraska are being "surprised" by the fact that the Cash for Clunkers rebates are taxable.

Umm, hello. It's money coming to you. Even though it's from the gov't, they still want their share. And I strongly suspect that not only is it taxable on the state level, but also on a fed level. As income. Whoopsie.

I have a feeling we're gonna see a lot of one year old used cars out on the lots next year....

Scout26 · « **Reply #1 on:** August 28, 2009, 02:38:03 PM »

HA HA !!

Gewehr98 · « **Reply #2 on:** August 28, 2009, 02:52:13 PM »

There will be many more surprises before the Cash For Clunkers fiasco fades to a distant memory.

One dealership accountant I talked to says her particular dealership expects many repossessions of new vehicles in a few months. Her explanation was that those who traded in those clunkers really couldn't afford a new vehicle to begin with.

Balog · « **Reply #3 on:** August 28, 2009, 02:53:31 PM »

That whole scam is going to be a massive and expensive facepalm for the Obama administration.

slugcatcher · « **Reply #4 on:** August 28, 2009, 03:49:47 PM »

Wow. Taxing tax money. What a shocker. That's like taxing social security.

AZRedhawk44 · « **Reply #5 on:** August 28, 2009, 03:51:08 PM »

Quote from: slugcatcher on August 28, 2009, 03:49:47 PM

Wow. Taxing tax money. What a shocker. That's like taxing social security.

Be quiet, or you'll give 'em more ideas.

Ben · « **Reply #6 on:** August 28, 2009, 04:10:48 PM »

Quote

Her explanation was that those who traded in those clunkers really couldn't afford a new vehicle to begin with.

That's one of the things I was figuring we'd see. Some aspects of this are really no different than, "here's a house you can't afford to keep".

Gowen · « **Reply #7 on:** August 28, 2009, 04:41:32 PM »

Quote from: AZRedhawk44 on August 28, 2009, 03:51:08 PM

Be quiet, or you'll give 'em more ideas.

You have clinton to thank for that one.

charby · « **Reply #8 on:** August 28, 2009, 04:46:37 PM »

Quote from: scout26 on August 28, 2009, 02:38:03 PM

HA HA !!

grampster · « **Reply #9 on:** August 28, 2009, 04:46:45 PM »

They're already taxing Social Security. I'm not sure the story is accurate on income tax on the clunker trade in. Government bought your clunker for $4500.00. No different than if you sold your lawnmower. Income neutral exchange. They got the clunker, you got the cash. No income.

What the deal is, is that most states that tax vehicle purchases charge a "sales" or "value" tax on the agreed upon sale price of the new vehicle before a trade in is deducted. IE: $30,000.00 vehicle price, 6% sales tax (Michigan) = $1800.00
Trade in a clunker - $4500.00 = $25,500.00. Sales tax is still $1800.00.

280plus · « **Reply #10 on:** August 28, 2009, 05:03:02 PM »

I was a little surprised when I learned I got taxed on my military pay when I was in. Another tax on tax revenue money. Sounds like double dipping to me. Then there's all the extra red tape and labor to implement said tax.

vaskidmark · « **Reply #11 on:** August 28, 2009, 06:17:27 PM »

To make matters worse - if that's possible.

Dealerships are "holding" cars until the .gov coughs up the cash for the clunker. http://www.dealerrefresh.com/clunkers-cars-dealers-results/

Yup! You bought the new car, and plunked down either cash or a promisory note and left your clunker behind. And the dealer poured liquid glass into the crankcase and fused your engine parts into a bad sculpture. You have nothing to drive around in, but you owe that first payment right on time.

Do you think there might be a few folks who are looking for pitchforks and torches already?

Me, I'm gonna bring cases of marsmallows and sell them at a discount. I'm counting on tips to make up the difference.

stay safe.

skidmark

Gewehr98 · « **Reply #12 on:** September 13, 2009, 02:45:46 PM »

Is this logic correct, or is he missing some numbers?

(A comment submitted to today's Madison Capital Times)

Quote

A clunker that travels 12,000 miles a year at 15 mpg uses 800 gallons of gas a year.

A vehicle that travels 12,000 miles a year at 25 mpg uses 480 gallons a year.

So, the average Cash for Clunkers transaction will reduce US gasoline consumption by 320 gallons per year.

They claim 700,000 vehicles so that's 224 million gallons saved per year.

That equates to a bit over 5 million barrels of oil.

5 million barrels is about 5 hours worth of US consumption.

More importantly, 5 million barrels of oil at $70 per barrel costs about $350 million dollars

So, the government paid $3 billion of our tax dollars to save $350 million.

We spent $8.57 to for every dollar saved.

How good a deal was that

They'll probably do a great job with health care though!!

lupinus · « **Reply #13 on:** September 13, 2009, 02:50:09 PM »

Gew-

I have no idea if that's true or not. But it's hilarious.

I can either by amused or depressed by the sheer (predictable) stupidity of our government. I figure it's better to just be amused at this point.

Ben · « **Reply #14 on:** September 13, 2009, 03:28:56 PM »

I don't know if it's true or not either, but the numbers sure sound right. And they didn't even calculate in the energy used to demolish the clunkers. If verified, I would really like to see this get some news time.

Iain · « **Reply #15 on:** September 13, 2009, 03:31:11 PM »

Gewehr - was cash for clunkers about saving oil? Or was it about moving vehicles off forecourts?

lupinus · « **Reply #16 on:** September 13, 2009, 03:32:44 PM »

it was about "Where my free *expletive deleted*it"

MechAg94 · « **Reply #17 on:** September 13, 2009, 03:54:22 PM »

It is more than that Gewehr98. The govt also loses the gas tax revenue for the that fuel that is "saved".

Gewehr98 · « **Reply #18 on:** September 13, 2009, 04:21:13 PM »

I'm just waiting for the repossession cycle to begin on new cars that the former clunker owners really couldn't afford to begin with.

Although, I'm sure somebody can put a positive White House spin on that, too.

Ben · « **Reply #19 on:** September 13, 2009, 04:55:45 PM »

Quote from: Iain on September 13, 2009, 03:31:11 PM

Gewehr - was cash for clunkers about saving oil? Or was it about moving vehicles off forecourts?

If it was just about moving the vehicles off the lots, they wouldn't have put a restriction on what vehicles qualified. I'm sure there are plenty of people who could use a new pickup and would have used the rebate for that, and if someone wanted to get $4500 back on their $80K Mercedes, why not let them? That's $80K more out of the bank and into the economy, and if sold in a State that collects sales tax, an influx of tax revenue. Limiting it to "green" vehicles clearly made it about the environment just as much as stimulating car sales.

And stimulating car sales is debatable, because like G98, I'm waiting to see the repossessions begin. Not to mention the effect on car dealerships when the inevitable post-program lull in sales hits.

Phantom Warrior · « **Reply #20 on:** September 13, 2009, 05:41:29 PM »

Quote from: Ben on September 13, 2009, 04:55:45 PM

Not to mention the effect on car dealerships when the inevitable post-program lull in sales hits.

Already happening...

RevDisk · « **Reply #21 on:** September 13, 2009, 06:02:52 PM »

Quote from: Gewehr98 on September 13, 2009, 02:45:46 PM

Is this logic correct, or is he missing some numbers?

(A comment submitted to today's Madison Capital Times)

"We spent $8.57 to for every dollar saved."

Alternatively phrased, the program would be neutral if every person kept their car for eight and a half years. Assuming every car stays functional, said vehicles aren't replaced, no decreases in fuel efficiency, no decrease in fuel prices, zero additional administrative costs, if the program was funded out of revenue and not raised by borrowing, etc.

Essentially, it will take eight and a half years to balance cost transfer. But it's neutral from a semantic POV anyways. Just the money went to (theoretically) car companies instead of oil companies, minus administrative costs and such.

Daniel964 · « **Reply #22 on:** September 13, 2009, 07:30:09 PM »

Quote from: RevDisk on September 13, 2009, 06:02:52 PM

"We spent $8.57 to for every dollar saved."

Alternatively phrased, the program would be neutral if every person kept their car for eight and a half years. Assuming every car stays functional, said vehicles aren't replaced, no decreases in fuel efficiency, no decrease in fuel prices, zero additional administrative costs, if the program was funded out of revenue and not raised by borrowing, etc.

Essentially, it will take eight and a half years to balance cost transfer. But it's neutral from a semantic POV anyways. Just the money went to (theoretically) car companies instead of oil companies, minus administrative costs and such.

Actually it would take more than 8 1/2 years cause that money could be earning interest.

seeker_two · « **Reply #23 on:** September 13, 2009, 07:50:42 PM »

Quote from: Gewehr98 on September 13, 2009, 04:21:13 PM

I'm just waiting for the repossession cycle to begin on new cars that the former clunker owners really couldn't afford to begin with.

Me, too....I may be in the market for a new ride by then....

Rudy Kohn · « **Reply #24 on:** September 13, 2009, 08:11:00 PM »

It's actually not quite so bad as that, either.

The original poster assumed 1 barrel of oil->42 gallons gasoline, that is, perfect conversion of crude to gas. This is not the case. Poking around for a few minutes, I found a link where someone asked what the conversion is, and it's suggested that it's about 20 gallons of gas per barrel of oil, plus other derivatives to make up the balance.

This suggests the amount saved per year is closer to $800 million, which makes the ratio closer to 4:1, or four years ownership of the new vehicle.
Of course, this ignores the various other costs and problems, such as the massive destruction of consumable goods, etc.

News:

Author Topic: Cash for Clunkers 'Surprise' (Read 12245 times)