Excuse me for ranting !

[frayne]

Cash for clunkers and first time home buyer tax credit programs irk the crap out of me. Am I the only that feels like people who don't or can't take advantage of those programs are subsidizing those who can ? Maybe not a redistribution of wealth but sure as hell, a government give away under the guise of stimulating the economy. Where does this money come from anyway ?




Cash For Clunkers Showed Americans Will Buy If Given Incentives, Corker Tells Realtors
by Judy Frank
posted August 25, 2009

If the federal government's wildly successful recent Cash for Clunkers auto rebate program did nothing else, it showed that when Americans are given incentives to make purchases they will do so, Sen. Bob Corker said Tuesday morning in Chattanooga.

That's why he supports the federal program offering tax credits of up to $8,000 to qualified first-time homebuyers who purchase a principal residence between Jan. 1, 2009 and Dec. 1, 2009, he said during a talk to members of the local Realtors' Association.

The $8,000 tax credits have given the real estate industry a shot in the arm, he noted, much as the Cash for Clunkers program provided the beleaguered auto industry with much-needed sales and income.

"As a matter of fact, I had hoped that we would give a $15,000 tax credit for all home buyers," he told the realtors, who applauded the idea.

It's unclear whether the $15,000 credit will ever pass, Sen. Corker said, but at the very least he would like to see the $8,000 credit extended beyond Dec. 1, when it is due to expire.

The Chattanooga Republican said he believes there are signs that the economy is beginning to pull itself out of the recession in which it was mired, and that lines of credit are beginning to be extended to large commercial borrowers.

 

[Leonidas]

Technically, I think we're borrowing it from the Chinese. You remember them, the folks who run over their own people with tanks, execute political prisoners and send their families the bill for the bullet, etc.

Eventually tax dollars will pay for it, but we'll have to include interest payments to all the people holding our IOU's. Except, aren't we also buying some of our own debt? Kind of like borrowing from one loanshark to pay the vig due to another. I guess we will pay double interest on those bills.

I"m thinking that I probably didn't make you feel any better about cash for clunkers.

 

[calmloki]

Technically, I think we're borrowing it from the Chinese. You remember them, the folks who run over their own people with tanks, execute political prisoners and send their families the bill for the bullet, etc.

Eventually tax dollars will pay for it, but we'll have to include interest payments to all the people holding our IOU's. Except, aren't we also buying some of our own debt? Kind of like borrowing from one loanshark to pay the vig due to another. I guess we will pay double interest on those bills.

I"m thinking that I probably didn't make you feel any better about cash for clunkers.

No, taxes are bad and our elected officials have to face those pesky voters now and again. Inflation, OTOH, doesn't need to be voted on and our elected officials can decry inflation while passing out bits of yummy pork to us voters*. Inflation also reduces the cost of those Chinese loans you note. Not believing the deflation claims here.

* Happy recipient of my personal bacon bits: horrible sidewalk in front of house being replaced by juvenile delinquent looking youth group - I pay for concrete cost only, ARRA pays for their labor. Good deal methinks, better than them stealing stuff, the work should reduce their evil-doing evening energy too.

 

[FIREd]

I wish we could have taken advantage of cash for clunkers. We have 2 older cars that we would like to change, alas our cars are not guzzling enough gas and we didn't qualify. We should have bought a Hummer... Yes I am not really happy about the way my tax dollars are being used, but I rarely am.

Besides, I really don't think that cash for clunkers really helped the economy that much. People probably stopped buying cars weeks before Cash for Clunkers started (they wanted to wait to take advantage of the rebate), then everyone rushed to the dealership for about 3 weeks to get the rebate, and now I think we are looking at a car sales overhang that will last several weeks. Average it all out, and it probably didn't do much to boost the economy.

 

[FUEGO]

Besides, I really don't think that cash for clunkers really helped the economy that much. People probably stopped buying cars weeks before Cash for Clunkers started (they wanted to wait to take advantage of the rebate), then everyone rushed to the dealership for about 3 weeks to get the rebate, and now I think we are looking at a car sales overhang that will last several weeks. Average it all out, and it probably didn't do much to boost the economy.

I saw reports that said dealers were reporting 30% higher than average sales volumes. For one month. Now, it is over, our $3 billion is gone. The "690,000 in new vehicles sales" brought about by cash for clunkers is probably 1/2 or so people that were going to buy anyway, and 1/2 people who were incentivized enough to buy one immediately that they would not have otherwise in the next year.

My parents bought a new Camry and traded in a car that didn't really run that hasn't been driven in years. At least someone in the family got some of that sweeet government cheese. Although the car price was inflated because they were under the gun to complete the transaction this weekend.

 

[Texas Proud]

I am driving my new car... thanks in part to all of you...

But, I think that clunker money was money spent better than the almost $800 billion stimulus package... at least not all the money came from [-]the taxpayer[/-] the govmt.... I had to kick in a lot of my own... and that money would not have been put into the economy for about 4 more years (maybe 6 if it kept running)....

And the amount for each person (including children) was $10... so YOUR share of MY car is 0.000014493 dollars...

But you are true.... the gvmt should stay out of a lot that they are in... it will never happen....

 

[Texas Proud]

Ohh.... do you think that they should also stay out of housing by getting rid of the home interest deduction?

Stay out of college tuition by getting rid of the tax credits and the Pell grants? What about the cheap loans?

Stay out of the current healthcare by taxing your health insurance premiums?

Stay out of charity issues by not allowing you to deduct charitable contributions?

Stay out of marriages by not having a lower rate for married taxpayers?

As you can see, there are a LOT of items where the gvmt pays a lot more than the clunker money... some I can partake, some I can not... I can grumble about the ones that I can not, but I stopped that a long time ago...

 

[NW-Bound]

No home interest deduction? Good! It would prevent the housing bubble in the 1st place.

College tax credits and Pell grants are among the few things that I think are worthwhile. It supposedly makes the future workforce more competitive in the global market. Some may disagree with me here, but that's my thinking. In a different thread, Trek told how inexpensive college education was in Europe. Obviously, it was heavily subsidized by their governments.

Tax heath care benefits of workers that are paid by employers? Why not? Early retirees do not get to deduct their insurance premium that they pay out of pocket.

Charity deduction? I can see arguments for it to reduce social spending by the government. Many have told me that private charity is more efficient than social programs by the government.

Lower taxes of married people? I believe a working couple pay more taxes, not less, filing a joint return, compared to filing as two single persons. That is called the "marriage penalty". Am I wrong?

Anyway, it is true that grumbling about these things doesn't do much good. Heck, I am in the market for an RV, and I need an RV-for-clunker program now.

 

[bbbamI]

Excuse me for ranting !

You're excused.....

 

[Leonidas]

No, taxes are bad and our elected officials have to face those pesky voters now and again. Inflation, OTOH, doesn't need to be voted on and our elected officials can decry inflation while passing out bits of yummy pork to us voters*. Inflation also reduces the cost of those Chinese loans you note. Not believing the deflation claims here.

I guess I was in denial about the inflation thing. Wonderful, we can pay off those pesky commies with cheaper dollars.

I wonder if my morning Cheerios will taste better when they cost $50 a box.

 

[Stevewc]

I did read somewhere today that everybody that took advantage of the clunker deal will have to add the $4500 as taxable income, so you might find some pleasure in that tidbit.
Steve

 

[FUEGO]

No home interest deduction? Good! It would prevent the housing bubble in the 1st place.

College tax credits and Pell grants are among the few things that I think are worthwhile. It supposedly makes the future workforce more competitive in the global market. Some may disagree with me here, but that's my thinking. In a different thread, Trek told how inexpensive college education was in Europe. Obviously, it was heavily subsidized by their governments.

Tax heath care benefits of workers that are paid by employers? Why not? Early retirees do not get to deduct their insurance premium that they pay out of pocket.

Charity deduction? I can see arguments for it to reduce social spending by the government. Many have told me that private charity is more efficient than social programs by the government.

Lower taxes of married people? I believe a working couple pay more taxes, not less, filing a joint return, compared to filing as two single persons. That is called the "marriage penalty". Am I wrong?

Anyway, it is true that grumbling about these things doesn't do much good. Heck, I am in the market for an RV, and I need an RV-for-clunker program now.

I agree with all these points. Why not revisit some of these deductions and tax breaks? Sure, some individuals would win and some would lose, but in a revenue neutral shuffling of the tax code, our marginal tax rates would have to go down if all these deductions and credits were removed. That would increase the incentive to earn money.

 

[Rustic23]

I heard a radio commentator say 'Cash for Clunkers ended yesterday and it was a huge success and under budget, only 2.9 billion' Only in Washington could you call a 1 billion dollar program that grows to 3 billion under budget at 2.9 billion!

 

[NW-Bound]

I agree with all these points.

So, you are looking at RVs too?

 

[FUEGO]

So, you are looking at RVs too?

Sure if I can get one below market and flip it and make a quick buck! I was more agreeing with the general "I need an X, therefore the government should have a "Cash for old X" program". Maybe for HDTV's or xbox 360's or PS3's. Or houses. Or Mutual Funds/401ks. You know, stuff that I really really want a lot ergo the government must give me!

 

[NW-Bound]

I just have an idea. What if the gummint lets us buy stocks at the low March prices, and pays the difference from the current prices? This creates an instant rush to buy stocks, and propels the Dow immediately to 14,000 and even beyond. That in turn allows us to turn spendthrifts, and stimulate the economy even more. We finally see the money velocity that Ziggy often talks about. The gummint gets a lot of money back on the cap gain taxes that we will pay when exchanging stocks for toys. What a virtuous circle!

Ya think I can get a Nobel in economics for this?

 

[Texas Proud]

....

Lower taxes of married people? I believe a working couple pay more taxes, not less, filing a joint return, compared to filing as two single persons. That is called the "marriage penalty". Am I wrong?

Anyway, it is true that grumbling about these things doesn't do much good. Heck, I am in the market for an RV, and I need an RV-for-clunker program now.

The married tax rate is lower than the individual tax rate... so a single person who make $100,000 pays more tax than the married guy in the next cube who makes $100,000 who has a stay at home wife with two kids... hence, there is a 'lower' tax rate for a married person.. (BTW, the single person would pay more tax than the married person even if he had a GF and two kids at home... in case you want to make the comparison more similar)...

You pointed out the other problem... with a graduated tax rate, if two single people are making $50,000 each, the will pay more in taxes if they got married instead of living together... however, this is not due tax rates being higher, just that they have to add the second $50K to the first which is all taxed at the higher rate (but still lower than the rate for a single person at that same dollar point)...

 

[frayne]

Guess my big problem is with refundable tax credits.

 

[Texas Proud]

Guess my big problem is with refundable tax credits.

I think my boss would agree..... he has a lot of research credits that he can not use... says 'what good is a credit if you can not use it'.... and he pays a LOT in taxes, so he is not at zero... you can only take credits until your AMT would kick in... then they are worthless...


I have about $50K of foreign tax credits I could use if I could only get some income from overseas.... not likely where I am...

 

[tryan]

Gota go get my 30% tax credit for a new wood stove ... stay tuned.