The Senate's auto tax incentives favor the wealthy.

[screembloodymurder]

As proposed, the sales and interest tax deductions are heavily biased to favor of the wealthy. Who buys $50,000 autos? Not an average American worker. Which income tax bracket gets the biggest % break? Those in the top bracket. These people don't need incentives and certainly don't deserve a bigger share of the stimulus package. Congress needs to change the tax deduction into a tax credit and make it the same $$$ everyone.

[MarcMus]

1. Yes

But somehow that sort of progressive legislation never gets passed.

[glinda]

2. Yes indeed!

[Demobrat]

3. This is for the benefit of automakers.

Not the auto buying public. Most people's first cars are not brand new. They buy used and keep them running as long as they can. If Obama really wants to help the average person he'll reinstate tax deductions for credit card interest. But that would help struggling poor people the most, so it's no wonder it hasn't even been mentioned.

[JohnWxy]

4. great info! can you provide us a link? recommended.

[tandot]

5. Please provide a link. The tax deductions seem to have an income limit

"The amendment, brainchild of Sen. Barbara Mikulski (D-Md.), would allow buyers to claim an income tax deduction for the sales tax they pay on a vehicle purchase and for the interest on their loan. The tax break would be available to individuals making up to $125,000 a year and to couples making up to $250,000.

The tax break apparently would be retroactive, covering new vehicles purchased between Nov. 12, 2008, and Dec. 31, 2009, according to Mikulski’s office.

“My amendment is simple,” the senator said in a statement. “If you buy a new passenger car, minivan, or light truck by December 31st of 2009, you will get a tax deduction for your sales or excise tax and the interest on your loan.

“A family would save about $1,500 on a $25,000 car, not counting the additional incentives from dealers.”

more:

http://latimesblogs.latimes.com/uptospeed/2009/02/buy-a-car-get-a.html

[screembloodymurder]

6. How about an example?

Ricky Rich buys a $49,000 gas guzzler.
He deducts the 6% sales tax (6% of $49,000 = $2940) and the 6% interest on the loan ($7,838 over the life of the loan) and winds up with a $10,778 deduction.
In the 35% bracket the tax savings would be $3,772.30.

I buy a $16,000 Pontiac Vibe. (6% of $16,000 = $960) and my interest deduction is ($2,559 LOL) and I wind up with a $3,519 deduction.
In the 15% bracket the tax savings would be $528.00