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Tax boom for Cash for Clunkers

 
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dawn
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Joined: 26 Jun 2004
Posts: 311
Location: Mishawaka, IN

PostPosted: Tue Aug 25, 2009 2:04 pm    Post subject: Tax boom for Cash for Clunkers Reply with quote

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.
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