Good ticker, Karl.

The sheep get fleeced... again.

John

Is the $4,500 taxable for Federal Income Tax?

Found the answer to my question:
According to: http://www.mydollarplan.com/cash-for-clu....

"Taxes: This credit will not be subject to income tax. However, whether it is subject to sales or local tax or not will vary by area."

If you were paying full sticker price, you are dumb. No sympathy here. Car salesmen are low people. That's the way it is.

Quote:

Car salesmen are low people. That's the way it is.

It's not just the salespeople, it's the whole car industry that have no ethics!!

Exactly which industry does have ethics?

Beat the system when selling a car as a private sale by suggesting to the buyer of the used car that he only uses cash and tell the tax assessor he only paid $500 instead of $5000. Yeah it's fraud but screw 'em! Texas recently passed a law to combat this that says even if you paid $500 for the car they still tax you on the blue book value! This must have been a rampant problem until they passed the law. Now you can just "give" the vehicle as a gift and the recipient only has to pay a $10 tax and still circumvent the law. Silly stuff.

What would the math look like here? Even if you pay 10% sales tax and 7% income tax, it's still only ~$750 off your $4500 check. But if it doesn't count as income, then it's only sales tax, which isn't that much.

Friends in PA bought a used car last year for their college-bound kid and only reported a % of the actual price they paid as the cost of the car when they registered it.

About 9 months later PA sent them a letter saying they owed additional tax based on the blue book value of the car. They had to prove that the car was in less than "excellent" condition in order to avoid paying additional tax.

Some states are getting VERY hungry for tax revenue.

Here in Michigan we pay full sales tax (6%) on the sale price of the vehicle, trade-in value is not deducted first. So it didn't have much effect, except for those that paid too much for the new vehicle to begin with!


Used vehicle sales tax is under-reported a lot, I'll bet Jenny goes after that like other states have started to do.

MA does the same thing. It's worse for 'classic' cars that may be in very bad condition and purchased just for parts of a massive future restoration.

They charge sales tax based on the full collectors value of an "Excellent" condition car, even if you rightly paid only 10% of that for one that's maybe not even drivable.

You have to fight like hell to get the sales tax lowered but it will never match what you actually paid if it was only 10% of Excellent condition blue book.

One more thing. Since the car is destroyed, you get zero for the trade in. Most cars have some trade in value. Some cars have a lot of trade in value. I traded in a car a few years ago and I was shocked what they offered me, which was about 97% of NADA retail.

So, in order to figure out the true value of Cash for Clunkers, it's really Rebate-Sales Tax-Income Tax-Trade in Value. In many, if not most cases, the true value of CFC for the consumer was less than $1000, if that. Throw in the interest on the new car and drive off depreciation and virtually everyone who participated in this program is upside down the moment they drive it off the lot.

Nothing ever changes. The Candyman comes and offers you free cash and the bottom of the economic gene pool jumps. The smart people pass. I hope your readers passed.

Any person who does not bargain on every component of buying a car is an idiot. I go in bargain on the car and then the trade-in get them to the point of selling and then just as we are about to sign oh let me think about it. Then check at another dealier if he can beat the price. If so then maybe go back to the original one. They get tired of seeing me.

Oh, and the financing is another matter. Last car I bought was 0% for 5 years. I then deducted 100% of the car cost in the first year for business because that is all I drive it for. I jokingly tell people they paid for 50% of the cost of my truck.

Karl, good ticker but I think you might have type'od the following sentence: "what's worse those states that tax income (that would be most of them!) might wind up counting this as income for state sales tax purposes too, effectively taxing you twice."

Did you intend to say "as income for income tax purposes too ..."?

Just a sidebar--here in AZ there is no sales tax on private party sales.

If it is taxable by way of the income tax, what about all the welfare and social security disability cashed in and now they won't get their money or food stamps because they "made" too much money? What about income based exemptions on real estate and income based food and utility programs like heating assistance?

And the government will now claim that everyone's "income" went up... how's that for green shoots?

ISH - I want a new truck but couldn't part with my beat up Subaru mini-suv... besides the gas mileage was lower for the new truck... rats!!

If I used the cash for clunkers, I'd have titled a stripped car from a junk yard (if possible or required) and towed the thing to the dealer... then I could have a REAL taxable capital gain.

Should I wait to go shopping for a slightly used car in a few months when all the lamers miss payments?

Based on the estimated 450,000 clunkers traded in (according to a news report Sunday) the total value of the program comes out to $2,025,000,000. If this was a $3 billion program, where did the remaining $$$$$ go to?

.gov to the american people....

I got an email that said Limbaugh basically read my ticker on the air (!) Anyone hear him today?

Raaction wrote..

Based on the estimated 450,000 clunkers traded in (according to a news report Sunday) the total value of the program comes out to $2,025,000,000. If this was a $3 billion program, where did the remaining $$$$$ go to?

Good grief! Do you expect the government to keep track of every measly billion? It was ... uh ... overhead. Yeah, that's the ticket!

Gen: Too busy getting caught up on Tickers.

Yes, I heard him and yes, it sounded like he was channeling you. Not word-for-word by any means, but the same points.

I wonder if El-Rushbo has The Ticker on RSS..... Hmmmm..

No of course not, every thing he says is pure and original thought.

/sarcasm

I used to like Rush but he's just so, well, clueless and focused on irrelevant crap these days that it's aggravating to listen.

Quote:

I used to like Rush but he's just so, well, clueless and focused on irrelevant crap these days that it's aggravating to listen.

Almost all talk radio these days is focused solely on the health care issue. I got so sick of it I downloaded The Federalist Papers from Librivox, burned 'em to a CD, and now I listen to that during my commute.

And it sure beats the endless commercials promising to tell me the secrets that other gold companies don't want me to know.