Manufacturing Information Solutions

[dawn]

The $4500 "cash for clunker" rebate...turns out, people will have to pay tax on that $4500!

Thing is, if you trade in a used car for $5K and bought a new car for $15K, you only have to pay sales tax on the difference, $10K.

But, if you bought a new car for $15K without trade-in, you pay sales tax on $15K.

Then the car, let's say you sold out right....that purchaser has to pay sales tax on the full $5K. So gov really prefers 2 separate transactions...this way they get sales tax rev off of $20K in stead of the $10K the other way.

This rebates helps them get more of the tax revenue out of the deal the clunker rebate, that is.