Michigan might ban direct auto sales

[Zaap]

Auto dealerships should have to compete the same as any other business, including against direct sales. Don't like it? Then maybe figure out why so many people loathe setting foot on an auto dealership lot and correct it.

 

[brycejones]

The Liberal argument says no, the auto company will just keep the same prices and make more profit.

States have a compelling interest in not allowing direct sales. It may cost them tax revenue. E.g., if I make a widget and sell it/ship it to you for $10 profit my state gets the income tax, not yours.

So auto dealers pay income tax in the state where they are located. Auto makers selling direct would pay income tax to their state (generally, the rules can get a bit complicated).

Fern

You work at a stealership don't you?

 

[rudeguy]

Speaking as someone from the Murder Mitten, I really don't care either way. But growing up here has taught me that the state can't stop sucking off the Big 3. If the Big 3 want it, they get it. Doesn't matter what is right for the state or the citizens.

Its how the state almost died when the Big 3 tanked and how Detroit died and remains dead.

 

[Fern]

If we do engineering work in states where we don't have an office we still have to file a tax return with that state and pay taxes on earnings we accrued there.

I know athletes/performers have to file income tax returns with every state they play in.

I highly doubt car companies are any different, if Tesla sells a car in a state they don't have an office it I would bet a lot of money on the fact they will have to file for revenue taxes in that state.

No.

Income tax:
Income earned from personal labor, such as athletes/entertainers and your engineers, is treated differently than product sales.

The question is about 'sourcing' the income, or put another way 'where was it earned'?

For personal services it is considered earned in the place the personal services were performed.

For sales of products, like cars (and I'm going to generalize and simplify as it's a rather complex issue), it's consider earned in the place where the sale took place. In this case it would be Tesla's sales office etc back in its HQ in CA (IIRC, it's in CA).

By way of example, we can ship products made here to Europe etc and not pay any income tax to European countries. Likewise, European companies make products in Europe and ship here yet pay no income tax to the US. In tax what we call a 'permanent establishment' can change that.

Sales Tax:
The tax is on the user/consumer of the product. None of the above rules for income tax apply. I.e., sales tax would be due to the state where the purchaser resides. Collection of sales taxes on products purchased over the internet has been a big issue for some time. Collection is difficult and relies on 'self reporting'. I don't the same problem for cars because they need to be licensed and registered, unlike PC's and other consumer products.

Fern

 

[Fern]

You work at a stealership don't you?

No, I'm a tax accountant.

Fern

 

[Fern]

Originally Posted by Fern View Post
In general whenever there's a discussion about reducing costs. E.g., reduce taxes (income, sales, whatever) when one claims the product could then be sold for less they usually counter that no, the business will keep more profit.

In any case it's not that important. There's a whole range of issues surrounding direct sales of auto's. We've been through the subject a few times here already.

Fern

What's interesting is that I'm pretty sure I've seen you make an identical argument the opposite way, that tax increases are invariably passed on to consumers. Very convenient how you seem to believe that only works one way.

The increase or decrease in costs to a consumer based on transaction or production cost changes has a lot to do with how competitive a marketplace is.

Read again, this time more carefully. I didn't make any claim above as regards passing on saving. yes, I do believe increasing costs, such as taxes, will result in tax increases. But since I personally made no claim about decreasing costs there can, by definition, be no contradiction.

You're erroneously attributing a liberal position to me in cases of decreases, then properly attributing my position when increasing costs. So yes, those positions are in conflict.

Fern

 

[MixMasterTang]

No.

Income tax:
Income earned from personal labor, such as athletes/entertainers and your engineers, is treated differently than product sales.

The question is about 'sourcing' the income, or put another way 'where was it earned'?

For personal services it is considered earned in the place the personal services were performed.

For sales of products, like cars (and I'm going to generalize and simplify as it's a rather complex issue), it's consider earned in the place where the sale took place. In this case it would be Tesla's sales office etc back in its HQ in CA (IIRC, it's in CA).

By way of example, we can ship products made here to Europe etc and not pay any income tax to European countries. Likewise, European companies make products in Europe and ship here yet pay no income tax to the US. In tax what we call a 'permanent establishment' can change that.

Sales Tax:
The tax is on the user/consumer of the product. None of the above rules for income tax apply. I.e., sales tax would be due to the state where the purchaser resides. Collection of sales taxes on products purchased over the internet has been a big issue for some time. Collection is difficult and relies on 'self reporting'. I don't the same problem for cars because they need to be licensed and registered, unlike PC's and other consumer products.

Fern

So for a car being sold through a car dealer, wouldn't the only income taxes being paid would be the profit they made on the car?

 

[Fern]

So for a car being sold through a car dealer, wouldn't the only income taxes being paid would be the profit they made on the car?

The auto manufacturer would pay income tax on the profit it received from selling the car to dealership. I believe that profit is tax only in the home state of the manufacturer and none of it taxable to the home state of the dealership.

The profit of the dealership is taxed in its home state.

Fern

 

[fskimospy]

Read again, this time more carefully. I didn't make any claim above as regards passing on saving. yes, I do believe increasing costs, such as taxes, will result in tax increases. But since I personally made no claim about decreasing costs there can, by definition, be no contradiction.

You're erroneously attributing a liberal position to me in cases of decreases, then properly attributing my position when increasing costs. So yes, those positions are in conflict.

Fern

So what do you believe? If costs are passed on to consumers then logically savings will be passed on to them as well, correct? Are you arguing that liberals are correct in this case then?

 

[Fern]

So what do you believe? If costs are passed on to consumers then logically savings will be passed on to them as well, correct? Are you arguing that liberals are correct in this case then?

The position of many liberals, which I stated above, has been that the savings will not be passed on.

I tend to think they would,

Fern

 

[NoStateofMind]

yay protectionism!

 

[smackababy]

because you have to have dealers to have service centers. obviously that's the only way to do it.

http://www.teslamotors.com/findus/service

Because, that is enough to cover the majority of people... There are 3 in remotely the Chicago area. Now, let's see if that works for any brand that sells more than 50,000 total cars, which is giving Tesla a lot more credit than they deserve.

No one said it was the only way to do it. It is something extremely convenient for consumers to be able to use though. Imagine if dealerships went away and Chevy did a recall. Where you getting that transmission shaft changed for free?

 

[fskimospy]

The position of many liberals, which I stated above, has been that the savings will not be passed on.

I tend to think they would,

Fern

So your argument is that businesses will not accept decreased profit in the case of taxes going up but will accept less profit if taxes go down.

The only way that makes sense is if businesses have decided that the exact amount of profit they are making now is the optimal amount of profit. That makes little sense. It also contradicts economic research into it. Isn't it vastly more likely that businesses pass on costs or savings to consumers based on how competitive their marketplace is?

 

[Fern]

So your argument is that businesses will not accept decreased profit in the case of taxes going up but will accept less profit if taxes go down.

That's the opposite of what I said and you quoted.

Are you feeling alright?

Fern

 

[AznAnarchy99]

Cant anybody think of the car salesman? Oh wait Michigan and NJ have. If there is one profession that is noble enough to have govt protect. It has to be the car salesman.

Aint that the truth. I just went through the negotiation process for two new cars and email bombed about 20 dealerships. I ended up going in person to a few where each and every one felt like a slimey scumbag that was trying to rip me off in the back end.

After that point I told them straight up, don't call me and don't tell me to come in and look at the car. I will be doing any and all negotiation on online and when I have something in an official agreement that I like, I will come down and sign the paperwork. That method worked for me.

 

[ElFenix]

Because, that is enough to cover the majority of people... There are 3 in remotely the Chicago area. Now, let's see if that works for any brand that sells more than 50,000 total cars, which is giving Tesla a lot more credit than they deserve.

No one said it was the only way to do it. It is something extremely convenient for consumers to be able to use though. Imagine if dealerships went away and Chevy did a recall. Where you getting that transmission shaft changed for free?

because GM wouldn't possibly open up more service centers than tesla. on the other hand, it's completely reasonable to expect a car maker that sells a few thousand cars to have 10s of service centers in any one major metro area.

The position of many liberals, which I stated above, has been that the savings will not be passed on.

I tend to think they would,

Fern

top. men.