Ignore all the gas savings crap and just look at how the car buyer got taken to the cleaners:
If you traded in a clunker worth $3500, you get $4500 off for an apparent "savings"
of $1000.
However, you have to pay taxes on the $4500 come April 15th (something that no
auto dealer will tell you). If you are in the 30% tax bracket, you will pay $1350 on
that $4500.
So, rather than save $1000, you actually pay an extra $350 to the feds. In addition,
you traded in a car that was most likely paid for. Now, you have years of payments
on a car that you did not need, that was costing you less to run than the payments
that you will now be making.
But wait, it gets even better: you also got ripped off by the dealer.
For example, every dealer here in LA was selling the Ford Focus with all the goodies
including A/C, auto transmission, power windows, etc for $12,500 the month before
the "cash for clunkers" program started.
When "cash for clunkers" came along, they stopped discounting them and instead
sold them at the list price of $15,500. So, you paid $3000 more than you would have
the month before. (Honda, Toyota , and Kia played the same list price game that Ford
and Chevy did).
So lets do the final tally here:
You traded in a car worth: $3500
You got a discount of: $4500
---------
Net so far + $1000
But you have to pay: $1350 in taxes on the $4500
--------
Net so far: - $350
And you paid: $3000 more than the car was selling for
the month before
----------
Net - $3350
We could also add in the additional taxes (sales tax, state tax, etc.) on the extra
$3000 that you paid for the car, along with the years of interest on the car loan
but lets just stop here.
So, who actually made out on the deal? The feds collected taxes on the car along
with taxes on the $4500 they "gave" you. The car dealers made an extra $3000 or
more on every car they sold along with the kickbacks from the manufacturers and
the loan companies. The manufacturers got to dump lots of cars they could not give
away the month before. And, the poor 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 $4500
in "free" money from the "government" when in fact Joe was giving away his $3500 car
and paying an additional $3350 for the privilege. + a payment and interest to the bank.
And, a chance to ruin his credit record if he's too much in debt already and loses his job.
How's that hope and change working for you?
If you traded in a clunker worth $3500, you get $4500 off for an apparent "savings"
of $1000.
However, you have to pay taxes on the $4500 come April 15th (something that no
auto dealer will tell you). If you are in the 30% tax bracket, you will pay $1350 on
that $4500.
So, rather than save $1000, you actually pay an extra $350 to the feds. In addition,
you traded in a car that was most likely paid for. Now, you have years of payments
on a car that you did not need, that was costing you less to run than the payments
that you will now be making.
But wait, it gets even better: you also got ripped off by the dealer.
For example, every dealer here in LA was selling the Ford Focus with all the goodies
including A/C, auto transmission, power windows, etc for $12,500 the month before
the "cash for clunkers" program started.
When "cash for clunkers" came along, they stopped discounting them and instead
sold them at the list price of $15,500. So, you paid $3000 more than you would have
the month before. (Honda, Toyota , and Kia played the same list price game that Ford
and Chevy did).
So lets do the final tally here:
You traded in a car worth: $3500
You got a discount of: $4500
---------
Net so far + $1000
But you have to pay: $1350 in taxes on the $4500
--------
Net so far: - $350
And you paid: $3000 more than the car was selling for
the month before
----------
Net - $3350
We could also add in the additional taxes (sales tax, state tax, etc.) on the extra
$3000 that you paid for the car, along with the years of interest on the car loan
but lets just stop here.
So, who actually made out on the deal? The feds collected taxes on the car along
with taxes on the $4500 they "gave" you. The car dealers made an extra $3000 or
more on every car they sold along with the kickbacks from the manufacturers and
the loan companies. The manufacturers got to dump lots of cars they could not give
away the month before. And, the poor 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 $4500
in "free" money from the "government" when in fact Joe was giving away his $3500 car
and paying an additional $3350 for the privilege. + a payment and interest to the bank.
And, a chance to ruin his credit record if he's too much in debt already and loses his job.
How's that hope and change working for you?
