Thursday, June 11, 2009

Treasury announces new tax deductions for auto purchases

AlphaNinja - Today the Treasury announced new tax deductions for auto purchases, pushing out into the future this nation's much-needed fiscal reality check. At least the $4billion (drop in the bucket these days!) "cash-for-clunkers" plan, announced earlier this month, would have a positive net impact on the environment, as it demanded trading in a car for one with better gas mileage.

This effort, unfortunately, is simply another example of the government picking the winners and losers in the economy - certainly not something the founding father's had in mind.

The details:

"The deduction is limited to the fees or taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home, or motorcycle.
The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers."

In it's efforts to exclude high-earners from enjoying this benefit (and I agree - median income Americans shouldn't subsidize wealthier people's luxury purchases), treasury encourages irresponsible behavior. They're saying that only if you earn UNDER $125k per year (single person), will we subsidize your purchase of a $49k car - a car that person should probably not be purchasing.

We're subsidizing the purchase of cars that are equal to the median US household income - not a responsible thing to do.

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