Cash for Clunkers:
Ignore all the gas crap and just look at how the
stupid 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 4 or 5 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 5 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 stupid consumer got saddled with even more debt that they cannot
afford.
The governent 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.
Ignore all the gas crap and just look at how the
stupid 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 4 or 5 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 5 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 stupid consumer got saddled with even more debt that they cannot
afford.
The governent 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.
almface: Did you copy and past this somewhere or should I credit you as the source when I forward it to everyone I know?
