Tax Breaks vs. Auto Bailout

[ebaycj]

So, I was discussing the Auto Bailout with a buddy of mine, and he came up with the following plan, instead of giving bailout money to the auto industry :

Friend's Plan

Tax break of $7500 per new vehicle purchased.
Tax break of $2500 per used vehicle purchased (no more than 4 years old).

To which I responded with a similar but different plan:


My Plan

Tax break of $5000 per new vehicle purchased.
Tax break of $1500 per used vehicle purchased (no more than 4 years old).

((tax breaks) x (1.5)) - If the vehicle has a combined gas mileage of over 25MPG (so $7500 / $2250)
((tax breaks) x (2.0)) - If the vehicle has a combined gas mileage of over 31MPG. (so $10000 / $3000)

What do you guys think? I personally feel that my plan would provide motivation towards better fuel economy overall (by both auto manufacturers and consumers). Both plans would stimulate new auto sales over used, but mine would also allow for people to benefit who are buying an economical used car.

Personally, I feel that any Auto bailout will be wasted, just as we have seen with the Financial bailout (banks still not lending).

 

[MovingTarget]

Not a bad idea if you are trying to replace the current lot of cars on the road with ones that are more fuel efficient (and maybe less polluting). However, this will probably not have a chance as it doesn't focus on the vehicles that are not imported. I don't think that it would be too popular in congress to have this going towards vehicles being imported from Japan.

Better yet, why not "shoot the moon" so to speak when it comes to this. Up the tax credit further for vehicles getting 45+mpg (or something even more insane). Not many of them are being produced now, but with the right incentive, you better bet that the big 3 will be ramping up production of cars meeting this standard very quickly.

 

[HardcoreRobot]

how about NO bailout, give that money BACK to the people and let them stimulate the parts of the economy that deserve stimulating

 

[Genx87]

Originally posted by: HardcoreRobot
how about NO bailout, give that money BACK to the people and let them stimulate the parts of the economy that deserve stimulating

Come on now, Govt is here to rescue us. What fun is it to allow the people to decide how to spend their money?

 

[dlx22]

Originally posted by: HardcoreRobot
how about NO bailout, give that money BACK to the people and let them stimulate the parts of the economy that deserve stimulating

really the bailout the auto makers want is chump change at this point, 30-50 billion dollars spread across consumers wouldn't do hardly anthing, now if you took all of the bailout money that has been dished out we might have a different story, I think I saw yesterday in someones sig that would be like 46,000 per household, and i know personally that amount of money right now would have completely turned around my financial state.

 

[Robor]

Either would be fine with me. I'm in the market to replace my FPOS Volkswagon and could use the break. Is there any sort of plan in the works? If so I'll hold on to this thing a little longer.

 

[piasabird]

I see some cases where people with large families need larger vehicles. However, I still do not like Giant SUV's. I can see grandma falling to her death because her SUV was too tall.

 

[JS80]

What about Chapter 11 reorg kill the unions and legacy costs?

 

[Genx87]

Originally posted by: JS80
What about Chapter 11 reorg kill the unions and legacy costs?

This is Big Union I mean Big Auto here. We cant have them do what every other business does that has a failing business model!

 

[Infohawk]

Originally posted by: JS80
What about Chapter 11 reorg kill the unions and legacy costs?

Yeah this sounds good.

How do the OP's plans help with the saving the _US_ auto industry?

 

[JTsyo]

Originally posted by: Infohawk

Originally posted by: JS80
What about Chapter 11 reorg kill the unions and legacy costs?

Yeah this sounds good.

How do the OP's plans help with the saving the _US_ auto industry?

How does the US cars compare to others in terms of fuel efficiency? Your plan might hurt the US makers if the others have better FE. Just the fact that US auto makers are having this much trouble might turn people away from them.

 

[MikeyLSU]

you should probably do some % of the price of a car.

I mean, giving a $10,000 for a fuel efficient car could mean someone getting a nice new Civic/corolla/ion type car for about $5,000 total.

 

[Fern]

Originally posted by: JS80
What about Chapter 11 reorg kill the unions and legacy costs?

I'm hearing that would still require financing from the federal gov.

They'll need financing to reorg (chapter 11), and nobody (banks) will lend to them. So w/o fed money they'd be liquidated (chapter 7).

Fern

 

[ebaycj]

Originally posted by: MikeyLSU
you should probably do some % of the price of a car.

I mean, giving a $10,000 for a fuel efficient car could mean someone getting a nice new Civic/corolla/ion type car for about $5,000 total.

Or a free base-level Nissan Versa ($9990, http://www.nissanusa.com/ ). I just realized that.

But then again, those ARE predominantly the types of cars you want being purchased, if we are trying to reduce oil consumption.

 

[ebaycj]

Originally posted by: Fern

Originally posted by: JS80
What about Chapter 11 reorg kill the unions and legacy costs?

I'm hearing that would still require financing from the federal gov.

They'll need financing to reorg (chapter 11), and nobody (banks) will lend to them. So w/o fed money they'd be liquidated (chapter 7).

Fern

Not to mention, when they default on the pensions that they are paying now, the government will have to cover the slack (or at least part of it).

 

[tw1164]

Would the car companies benefit from any of the used cars sold?

 

[miketheidiot]

Originally posted by: JS80
What about Chapter 11 reorg kill the unions and legacy costs?

why so the government can take over their obligations?

 

[CPA]

You know Dell just announced a ton of layoffs, I think we should get a taxbreak for computer purchases.

Oh, and Philips is now lowering their forcast for Q2 2010, how about a taxbreak for purchasing Plasma HiDef TVs.

Oh, and let's not forget about Circuit City closing stores and filing bankruptcy, so how about a taxbreak for all of the other electronic crap that's not covered by the first two.

 

[Squisher]

Someone please give me an example where people make a retail purchase of the size of an automobile where they don't put a great deal of weight into the viability of the people warranting that purchase.

If Circuit City fails you still have a warranty from Samsung, Sony, or whatever. If you purchase a flight through an airlines do you really care that they fail a week after your flight?

Bankruptcy for the automakers can be a real crapshoot. A representative of Moody's that testified before congress today said the cost to the US of the failure of the automakers would dwarf any money paid for a bailout.

 

[MovingTarget]

Originally posted by: miketheidiot

Originally posted by: JS80
What about Chapter 11 reorg kill the unions and legacy costs?

why so the government can take over their obligations?

Well, whether he or others promoting chapter 11 want to say it or not, this would be the effect... moving the liabilities over to the PBGC (Pension Benefit Gaurantee Corporation), which is funded by taxpayers. Besides, even though it is possible to do this under bankruptcy protection, it is often difficult. Union/pension benefits often come before many other creditors, so even if they did get financing for a reorganization, they may still be stuck funding them.

 

[BarneyFife]

Originally posted by: Genx87

Originally posted by: JS80
What about Chapter 11 reorg kill the unions and legacy costs?

This is Big Union I mean Big Auto here. We cant have them do what every other business does that has a failing business model!

So you're going cancel all the pensions? The government will pick up the tab then.

 

[sactoking]

Originally posted by: HardcoreRobot
let them stimulate the parts that deserve stimulating

ZJ?

What's a ZJ? If you have to ask, you can't afford it.

 

[miketheidiot]

Originally posted by: CPA
You know Dell just announced a ton of layoffs, I think we should get a taxbreak for computer purchases.

Oh, and Philips is now lowering their forcast for Q2 2010, how about a taxbreak for purchasing Plasma HiDef TVs.

Oh, and let's not forget about Circuit City closing stores and filing bankruptcy, so how about a taxbreak for all of the other electronic crap that's not covered by the first two.

all those companies are minor players at best, including dell.

 

[Fingolfin269]

Doesn't help anything at all if people can't get loans. The whole system is jacked right now.

 

[JS80]

Originally posted by: Fern

Originally posted by: JS80
What about Chapter 11 reorg kill the unions and legacy costs?

I'm hearing that would still require financing from the federal gov.

They'll need financing to reorg (chapter 11), and nobody (banks) will lend to them. So w/o fed money they'd be liquidated (chapter 7).

Fern

I meant to add as condition of bailout loan.