Tax Breaks For The Rich

It seems as if we have a new kind of economic privilege in America.

The Senate voted Tuesday to give a tax break to new car buyers, setting aside bipartisan concerns over the size of an economic stimulus bill with a price tag approaching $900 billion.

The 71-26 vote came as President Barack Obama said he lies awake nights worrying about the economy, and signaled opposition to congressional attempts to insert "buy American" provisions into the legislation for fear it would spark a trade war.

Sen. Barbara Mikulski led the successful effort to allow many car buyers to claim an income tax deduction for sales taxes paid on new autos and interest payments on car loans.

She said the plan would aid the beleaguered automobile industry as well as create jobs at a time the economy is losing them at a rapid rate. "I believe we can help by getting the consumer into the showroom," she said.

So government is now the marketing arm of the auto companies offering discounts to entice buyers? Do these critters have any idea of how foolish they look?

And what is this "if you buy a new car you get a tax break". If you buy a used car - nada. Don't people selling used cars deserve to have their market propped up? What makes them unworthy? Probably not enough union labor in the used car business to make it worth a politician's time.

Cross Posted at Power and Control

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posted by Simon on 02.05.09 at 09:03 PM










Comments

Used cars are gas guzzlers. We can't drive gas guzzlers, so no breaks for used cars. We must eliminate the used car market completely so we can replace them all with plug in electrics. Never mind that there's more pollution from all the trains and trucks that carry everything everywhere...

kimsch   ·  February 5, 2009 10:00 PM

Simon,

There is not a coherent thought amongst the entire bunch of Democrats, starting with the man-boy President and moving right through Reid, Dodd, Schumer, Pelosi, Franks and the rest of the lot.

The economic policy espoused by these folks falls under malpractice.

By the way, I like your blog very much. I visit, but need to do so more often. Thanks.


Barrett   ·  February 5, 2009 10:59 PM

an income tax deduction for sales taxes paid
That's not too useful if you live in a no-sales-tax jurisdiction like...oh...Anchorage or Fairbanks.
It sure would help if you lived in a city with a 10.25% sales tax, though.
Wait, what am I saying - this won't help Democrats, they don't pay taxes.

bgates   ·  February 6, 2009 12:05 AM

So interest on car loans is tax deductible now. What about us disciplined schmucks who pay for our whole car outright? What fools we were to not finance our cars.

Also, this will simply cause the prices of cars to artificially rise.

GK   ·  February 6, 2009 12:53 AM

GK:

Well look, they've already screwed all of us who've acted responsibly with our homes and home loans so why shouldn't they screw those who do the same with things like cars.

Comes the revolution the citizens of this country are going to put Robespierre to shame.

John Steele   ·  February 6, 2009 6:49 AM

Don't people selling used cars deserve to have their market propped up?

The opposite is going to happen. The market for used cars will be flooded and the price of used cars will drop. Except for the few that jump on the new tax break right at the start before the market get flooded, becuase of the drop in the used car market and resulting drop in the price one can get for a trade Joe Smuck will not be any better off.

It is all smoke and mirrors. Joe Smuck is no better off because of the house interest deduction. The benefit of the interest deduction is taken in consideration when one applies for a mortgage. Since everyone can take the interest deduction and everyone can get a bigger mortgage because of the deduction, then there are more people with more money out there bidding the price up of all houses. This happens in good time and bad. Outside of maybe the real-estate agents and anyone else that get a fee based on a percentage of the house price sale, no one actually benefits. The developers don't even benefit as much as one might initially think because the cost of the undeveloped land is bid up to take into account the house prices that are inflated because of the interest tax deductions on houses.

What these tax subsidies actually hurt the most are the people that the pols claim they are trying to help - the poor that are renting. The rents are higher because the cost of the rental price is up because of the inflated market of housing in general and because there is a relationship between the costs of purchased housing vs. rental property. Many property owners raised their rents on already owned property to match the rise in the price of housing. I bet the drop in rents has not matched the drop in housing prices.

I know it will never happen, but bring on a flat tax with a high initial deductable per person in the family; no benefit for being married, no benefit penalty for being married.

MayorOmalleySuxs   ·  February 6, 2009 8:28 AM

I'm rather sure you can deduct sales taxes anyway. But you have to itemize deductions.

I'm not sure about the present tax code, it was that way a very few years ago.

We should expect a Democratic Senator to know either. Or is it only Cabinet nominees who don't understand the income tax?

K   ·  February 8, 2009 2:42 AM

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