$4500 cash for that clunker free and clear?... Not really...

$4500 cash for that clunker free and clear?... Not really...

PostBy: Richard S. On: Wed Aug 26, 2009 10:40 am

http://market-ticker.org/archives/1371- ... Again.html

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.


Guess it depends on the state but looks like you'll be paying tax on the $4500 and possibly state income tax on it too. :roll:
Richard S.
 
Stoker Coal Boiler: Van Wert VA1200
Coal Size/Type: Buckwheat/Anthracite

Re: $4500 cash for that clunker free and clear?... Not really...

PostBy: SMITTY On: Wed Aug 26, 2009 11:40 am

In other words, you guys from MA can count on being taxed three times!
SMITTY
 
Stoker Coal Boiler: Patriot Coal - custom built by Jim Dorsey
Hand Fed Coal Stove: Harman Mark III (not currently in use)
Coal Size/Type: Rice / Blaschak anthracite
Other Heating: Oil fired Burnham boiler

Re: $4500 cash for that clunker free and clear?... Not really...

PostBy: tvb On: Wed Aug 26, 2009 1:43 pm

Sigh. It's so easy to verify (or disprove) these kind of false rumors before repeating them:

http://www.cars.gov/faq#category-06

FAIL!
tvb
 
Stove/Furnace Make: Alaska
Stove/Furnace Model: Channing III


Re: $4500 cash for that clunker free and clear?... Not really...

PostBy: Richard S. On: Wed Aug 26, 2009 2:27 pm

tvb wrote:Sigh. It's so easy to verify (or disprove) these kind of false rumors before repeating them:


Yes it is perhaps you should take your own advice:

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.


That page does however say it won't be taxed as income but I wonder if that is relation to federal taxes? Doesn't specify, just says it won't be counted as income. the article does use the word possibly taxed as income.
Richard S.
 
Stoker Coal Boiler: Van Wert VA1200
Coal Size/Type: Buckwheat/Anthracite

Re: $4500 cash for that clunker free and clear?... Not really...

PostBy: tvb On: Wed Aug 26, 2009 4:33 pm

Sales tax isn't income tax. It specifically says that it is not considered income. I don't think any state considers income beyond what the feds do - that is, most state returns (maybe all) are based upon whatever your federal taxable income is.

From the link I posted above:



Is the credit subject to being taxed as income to the consumers that participate in the program?

NO. The CARS Act expressly provides that the credit is not income for the consumer.


If charged sales tax on the value before the $4500 credit is applied, it is a local issue and not a federal one.
tvb
 
Stove/Furnace Make: Alaska
Stove/Furnace Model: Channing III

Re: $4500 cash for that clunker free and clear?... Not really...

PostBy: Richard S. On: Wed Aug 26, 2009 5:24 pm

The article doesn't say you will taxed as income, only there is "possibly" or "might" be chance. I'd imagine it boils down to state law.


tvb wrote:
If charged sales tax on the value before the $4500 credit is applied, it is a local issue and not a federal one.


I didn't say it was federal issue. The article is just pointing out you will be taxed by state or local agencies as opposed to not being taxed if you traded the car in.
Richard S.
 
Stoker Coal Boiler: Van Wert VA1200
Coal Size/Type: Buckwheat/Anthracite

Re: $4500 cash for that clunker free and clear?... Not really...

PostBy: Black_And_Blue On: Wed Aug 26, 2009 5:41 pm

It certainly wasn't FREE and it definitely isn't CLEAR what it accomplished.

Also known as Hoopties for Hybrids Yo' : http://bigthink.com/vanjones/van-jones-on-greening-the-nation-2
Black_And_Blue
 
Hot Air Coal Stoker Stove: Alaska 140

Re: $4500 cash for that clunker free and clear?... Not really...

PostBy: mikeandgerry On: Thu Aug 27, 2009 1:47 am

As a result of the stimulus package (ARRA), the sales tax on autos purchased from Feb 17, 2009 to December 31, 2009 is deductible on your federal income tax form even if you elect to deduct real estate taxes on schedule A in stead of sales taxes.

http://www.irs.gov/newsroom/article/0,, ... 19,00.html

According to cars.gov, the 3500 or 4500 government rebate is NOT taxable at the federal level.


However, For the calculation of NYS sales taxes, rebates are NOT a discount off the purchase price. I got a clunkers deal by trading my '01 Dakota for an '09 Ranger. The dealer retail price was $19200. They gave a $1000 discount, I received $2500 Ford incentive and a $4500 CARS rebate and got $130 in scrap value credit. I had to pay sales tax on 18200 (19200 less the 1000 discount) because the rebates are NOT considered purchase price adjustments.

http://www.tax.state.ny.us/pdf/memos/sales/m09_11s.pdf

My unanswered question is: Is the NYS Dept of Tax and Finance consistent with their Sales Tax bureau? or the IRS? If they are consistent with the IRS then they won't tax the rebates as income because they are purchase price adjustments. However if they are consistent with their Sales Tax Bureau, they will tax the rebates as income since they are not considered purchase price adjustments.
mikeandgerry
 
Stoker Coal Boiler: Axeman-Anderson Anthratube 130-M

Re: $4500 cash for that clunker free and clear?... Not really...

PostBy: CoalBin On: Thu Aug 27, 2009 12:15 pm

Another way to look at it is that the Government bought your vehicle & you applied that $$ to your purchase. This is why you are charge sales tax on that amount. You sold your car to the government. For a state to count that as income would be difficult at best. Everyone selling a used car would need to pay income tax on that amount of profit experienced over the depreciated value. For me cash for clunkers was a wash - I got $3500 for a van that was worth around $3500 - the big thing for me was that I did not have to go through the PITA of selling it to someone trying to pay me later in jelly beans & paper clips - then coming back to me when the wipers don't work. The downside was most dealers were inflexible in price (sticker), could not trade vehicles & had no inventory. Clunkers motivated me to buy a new vehicle.

"The government said 84 percent of the trade-ins were trucks and 59 percent of the new vehicles were passenger cars. New vehicles bought through Cash for Clunkers had an average fuel-efficiency of 24.9 miles per gallon, compared with an average of 15.8 mpg for trade-ins, a 58 percent improvement. " from http://www.nbcnews.com/id/32567404/ns/business-autos/

close to 10mpg average increase in MPG - 700,000 cars - I read the average saving in gas per year is $700 - thats $1/2 billion a year going into our economy and not to big oil.

Clunkers was far from perfect - but, would you rather give the clunkers money directly to the car makers & the 1/2 billion/yr to the oil companies ? :idea:
CoalBin
 
Stove/Furnace Make: Harman
Stove/Furnace Model: DVC-500

Re: $4500 cash for that clunker free and clear?... Not really...

PostBy: mikeandgerry On: Thu Aug 27, 2009 12:43 pm

I was pleased with my clunkers deal and it was close to the average deal statistically. I went from an actual 16 mpg to 24mpg. You are correct. There was no inventory at the dealers. They had shut down production several months ago. I acted quickly and was fortunate. There were just two trucks on the lot of the county's major Ford dealer that qualified. No one else in our county had a new small or mid size truck in stock! I didn't want to order something.

As for the disposition of the car, actually the car was scrapped and directly transferred to a scrapper. Neither the gov or the dealer took possession. I saw it at the scrapper the next day!

You can dissect a transaction any way you wish but ultimately the gov does what it wants to do in taxation. Consistency is immaterial.

I would like to see a true accounting of the net cost savings on the fuel difference versus the residual value of the capital goods (cars) destroyed before they were fully consumed plus the cost of the incentives. I think that analysis will prove that it all was a folly.

In your example you got what your car was worth, 3500. Thus the value of the car 3500 plus the CARS rebate of 3500 is 7000 of cash and capital expended to increase your mileage 9mpg. If your new vehicle lasts 150000 miles, your fuel savings will be (150k/25*2.75= 16500)-(150k/16*2.75=25781)= -9000. Thus you will save 2000 over the life of the vehicle and 3200 fewer gallons of gas will be burned over the life of the car. The problem is, it cost taxpayers 3500 to save you 2000. The effect on the environment notwithstanding, it wasn't a smart thing to do.

I sincerly doubt that anyone can prove that the environmental effect was significant under this program. Boosting CAFE standards would be more effective.
mikeandgerry
 
Stoker Coal Boiler: Axeman-Anderson Anthratube 130-M

Re: $4500 cash for that clunker free and clear?... Not really...

PostBy: CoalBin On: Thu Aug 27, 2009 2:22 pm

You may have seen your car at the scrap yard - but your title was signed over to " cars.gov" – every successfully submitted application had to have the back of the title signed over – in “black marker” Consistency is the Raison D'etre of tax court ( as a side note, I stripped everything off the van I needed as well – brought it in on E with a dead battery ) Another dealer swapped off a set of new tires off of a friends clunker – gave them to her & put on a set of junk tires & rims for her !

In your analysis of my situation, I incur a $ 9000 savings, (made with the assumption gas stays at 2.75) …... with a $2000 net "savings" that is above and beyond what was paid in the aggregate. – if you apply the average 9mpg increase you would also need to figure the average residual worth of the clunker – which I suspect is a lot lower. So just based on your rough calculation of oil savings alone, in the aggregate, the country shows a positive simple return of $2k ( I get back my 3500 + along with our 3500 + 2000 profit) – but I now am able spend the $9000 in our economy, which no longer goes to OPEC – but gets spent here –on imports?

CFC was not as much about saving gas and helping the environment, it’s mostly about stimulus.

For the detailed analysis – the effects of CFC are much more complicated – net out flows out of the country, reduced insurance claims, effects on lower income classes, scrap metal prices, averted shut down costs, bankruptcy costs, higher taxes ? supplanted by increased industrial output etc. Readers can choose their own reality news outlet for this.

I think the simple way to look at is again – Is stimulus neccesary? If so, who would you rather give the money to?

Plus – on a more personal note – I needed a car – this got me and a lot of people out of their caves & out spending some money. ;)
CoalBin
 
Stove/Furnace Make: Harman
Stove/Furnace Model: DVC-500

Re: $4500 cash for that clunker free and clear?... Not really...

PostBy: coal berner On: Thu Aug 27, 2009 5:29 pm

First of all this is Tax payer money not free Goverment Money there is no such thing. If your a tax payer you paid for the program or will be paying for it a long time down the road in higher taxes period . This program was a Joke Like every other Goverment Run Program They paid / spent twice or three times the amout of money then they / we will every get

back from it . When you add up the money spent on the program plus the retail money loss on most of these Vechicles
that where traded in Not all them where clunker. And not counting for all of the extra part time people that had to hired and paid for all of the paper work involved . You will never see the money spent come back . What a Big Joke and scam
You want to save cash on Oil Then lets drill are Own Oil & Mine more of are own coal In our own country and stop buying the oil from other countries which most of them are our enemy's .
coal berner
 
Stoker Coal Boiler: 1986 Electric Furnace Man 520 DF
Stove/Furnace Make: Electric Furnace Man
Stove/Furnace Model: DF520

Re: $4500 cash for that clunker free and clear?... Not really...

PostBy: mikeandgerry On: Thu Aug 27, 2009 10:01 pm

CoalBin wrote:You may have seen your car at the scrap yard - but your title was signed over to " cars.gov" – every successfully submitted application had to have the back of the title signed over – in “black marker” Consistency is the Raison D'etre of tax court ( as a side note, I stripped everything off the van I needed as well – brought it in on E with a dead battery ) Another dealer swapped off a set of new tires off of a friends clunker – gave them to her & put on a set of junk tires & rims for her !

In your analysis of my situation, I incur a $ 9000 savings, (made with the assumption gas stays at 2.75) …... with a $2000 net "savings" that is above and beyond what was paid in the aggregate. – if you apply the average 9mpg increase you would also need to figure the average residual worth of the clunker – which I suspect is a lot lower. So just based on your rough calculation of oil savings alone, in the aggregate, the country shows a positive simple return of $2k ( I get back my 3500 + along with our 3500 + 2000 profit) – but I now am able spend the $9000 in our economy, which no longer goes to OPEC – but gets spent here –on imports?

CFC was not as much about saving gas and helping the environment, it’s mostly about stimulus.

For the detailed analysis – the effects of CFC are much more complicated – net out flows out of the country, reduced insurance claims, effects on lower income classes, scrap metal prices, averted shut down costs, bankruptcy costs, higher taxes ? supplanted by increased industrial output etc. Readers can choose their own reality news outlet for this.

I think the simple way to look at is again – Is stimulus neccesary? If so, who would you rather give the money to?

Plus – on a more personal note – I needed a car – this got me and a lot of people out of their caves & out spending some money. ;)


I would generally agree with all you said. Stimulus was the immediate aim of the ARRA. The problem with all stimulus is that it is like priming a pump. If the pump is mechanically sound, it will prime and run. If the pump is broken, priming is silly. As I see it there are fundamental problems that need addressing. As you stated, most of the money is going to imported goods. Our economic model is not built for the long run.

I needed a new small truck. I'm happy.
mikeandgerry
 
Stoker Coal Boiler: Axeman-Anderson Anthratube 130-M

Re: $4500 cash for that clunker free and clear?... Not really...

PostBy: CoalBin On: Thu Aug 27, 2009 11:35 pm

mikeandgerry wrote:
I needed a new small truck. I'm happy.


Ditto Mike - I'm pleased with my new van - CFC motivated me to spend now - for all our sakes- lets hope that pump gets primed - otherwise my original plan of holding on to the vehicle for a few more years would have been a much better plan.

Comparing apples and oranges, Its scary business when my new 2009 with all bells & whistles cost less than my '97 did - in '97

For me buying a car now was also a hedge against a further devalued currency. ( another reason to stockpile coal)

Now only if I had some $ left for this years coal...... I hope the new van has good heat.
CoalBin
 
Stove/Furnace Make: Harman
Stove/Furnace Model: DVC-500


cron