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Getbig Main Boards => Politics and Political Issues Board => Topic started by: Soul Crusher on August 25, 2009, 12:30:59 PM
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Whoops! Cash For Clunkers Payments Are Taxable!
Jay Yarow|Aug. 25, 2009, 2:19 PM|12
PrintTags: Cars, Economy, Politics, U.S. Government, Emissions, Energy, Congress
Some of the drivers that bought new cars through cash for clunkers are learning that it wasn't quite the deal they hoped for.
Keloland Television: But many of those cashing in on the clunkers program are surprised when they get to the treasurer's office windows. That's because the government's rebate of up to $4500 dollars for every clunker is taxable.
"They didn't realize that would be taxable. A lot of people don't realize that. So they're not happy and kind of surprised when they find that out," Nelson said.
We imagine that MOST people didn't know the rebates were taxable. We certainly didn't.
Karl Denninger calls this hilarious, and explains the mix up:
The amusement here is how most (if not all) states compute sales tax (charged when you register the vehicle.)
When you buy a new car you pay tax on the difference between the new car's purchase price and the trade-in you present to the dealer. This is an intentional distortion in the law that is intended to favor dealers over private-party used car sales; if you sell your used car privately the new buyer pays sales tax but you do not get the offset on the purchase of your replacement vehicle - the only way to get that is to trade the car.
Dealers use this, of course, in negotiations, effectively pocketing the sales tax - and why not? It's a real difference to you!
But the "cash for clunkers" is not a trade-in. That's a $4,500 check from the government, basically.
So you get nailed at least once and possibly twice. Specifically, you pay sales tax on the full vehicle price (effectively paying sales tax on the $4,500!) and what's worse those states that tax income (that would be most of them!) might wind up counting this as income for state income tax purposes too, effectively taxing you twice.
I should have probably done a Ticker on this originally, but I (naively) believed that most people understood how the tax system works when it comes to new and used car transactions. Apparently, from the referenced news article, this is not the case, and I bet the car dealers, incredibly ethical people that they are, were fully informing their suckers, er, clients of this little "feature" of that government handout too.
PS: I have also received several emails informing me that dealers had customers so giddy over the "free cash" that they were selling cars at full sticker price besides - effectively, in many cases, turning the entire "cash for clunkers" money into pure dealership profit and managing to charge you tax (twice) on it as well. Ain't car dealers grand (several grand out of your pocket, that is!)
Read the whole thing at Market Ticker →
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Ha ha. Suckers.
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Nice.
Doesn't surprise me, they try to milk us for any taxation they can get to support their excessive spending. The more I experience, the more I am for limited government.
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Nice.
Doesn't surprise me, they try to milk us for any taxation they can get to support their excessive spending. The more I experience, the more I am for limited government.
I told everyone this was a major scam. The dolts on this board as usual, tried to argue with me about it, and are now proven wrong again.
This is a true govt scam at its best.
SUCKERS!
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Nice.
Doesn't surprise me, they try to milk us for any taxation they can get to support their excessive spending. The more I experience, the more I am for limited government.
Shoot:
Between:
1. The Sales Tax paid on the vehicle.
2. The income tax paid on the $4,500
3. The bank fees and interest payments
4. The money and utility they good have gotten out of their "clunker"
People are not saving a damn thing. They only now have debt to pay off. How people are so dumb simply astonishes me.
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(http://farm2.static.flickr.com/1084/1308831460_cd698b82b4.jpg)
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This is the best book on economics I have ever read Beach:
Its so simple really. The whole book simply explains that for every action, there is likely many other actions and results both seen and unseen that will occur.
Cars for Clunkers is no different.
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This is the best book on economics I have ever read Beach:
Its so simple really. The whole book simply explains that for every action, there is likely many other actions and results both seen and unseen that will occur.
Cars for Clunkers is no different.
Thanks for the recommendation. I'll add it to my list.
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No defenders of this
fine stupid program?
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Every income is taxable nowadays. Next step is a "Methane tax" for contributing greenhouse gasses to the atmosphere. A massive government agency will be set up to monitor all the people and tax them every time they fart.
Of course, illegal aliens will be exempted from this tax, like all the others. :P
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Its getting ridiculous...but predictible I suppose. Did you guys on the left know this rebate was attached to taxes?
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(http://farm2.static.flickr.com/1084/1308831460_cd698b82b4.jpg)
shouldn't this read DUH.
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shouldn't this read DUH.
Apparently not. "We imagine that MOST people didn't know the rebates were taxable. We certainly didn't."
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the question regarding tax has been on the FAQ section all the time:
http://www.cars.gov/faq#category-06
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the question regarding tax has been on the FAQ section all the time:
http://www.cars.gov/faq#category-06
Do I have to pay State or local sales tax on the amount of the CARS program credit?
MAYBE. The question of whether a consumer must pay State or local sales tax on the amount of the CARS program credit depends on the sales tax law of each State or locality. Consumers should review the law of their respective States or consult a tax advisor to answer this question.
Denninger was right - you are paying sales tax on the 4500 which in some states can be as high as 9%.