Cash for Clunkers is unfair

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The Cash for Clunkers legislation passed by Congress this past Friday and awaiting the President’s signature is incredibly unfair to a wide swath of the American public. Those taxpayers that do not have enough money to buy a new car even with the help of the government voucher will still pay taxes that will then be used to help others that have the money to buy new cars.

Cash for Clunkers means that depending on the car you have and the new car that you want to buy (new cars only, not used), you can get a $3,500 or $4,500 government voucher toward the purchase. If you can’t afford the rest of the car’s purchase price or don’t have a need for a new car, you get nothing. But your tax dollars will still go to those that do get something. Thank you.

The bill is unfair to people that earn their living in the used car industry, unfair to mechanics that fix older cars, and to the entire after-market parts industry. Every one of these hard working tax payers will pay taxes that will be used to hurt their means of earning their living – Their taxes will fund their competition, which in this case will be new cars competitively priced against their used cars, parts, and repair services.

We are supposed to be in a financial crisis. How many people who could not afford their mortgage will now take out a new car loan due to the “incentive” only to find themselves in financial trouble once again thanks to a government incentive? (see Fanny Mae and Freddie Mac). How many will default on those loans in 12 to 24 months?

The bill is in fact a slap in the face to Democratic voters that thought theirs was the party of the little guy.

There is a much better way of achieving the Congress’ primary goal which is to stimulate the car market, and the secondary goal of reducing carbon output. Instead of Cash for Clunkers, why can’t President Obama and Congress cut taxes now, across the board, and distribute that tax cut by ceasing withholding for a period of time? For example, instead of giving car buyers $3,500 – $4,500 for the purchase of a new car tied to the trade-in of an older car, give everybody the $3,500 tax break.

This would help wage and salary earners by putting an additional $3,500 into their hands to be used as they choose or as they need. Not everyone needs or wants a new car right now. Many people need instead to buy health insurance, pay for education, build up savings, make a down payment on a house or perhaps repairs or a new addition to their existing home. The key is, people can choose for themselves how to use their money, and government still stimulates the economy – Even non-taxpayers will benefit. Those that want to buy cars to replace their current car with one that creates a smaller carbon footprint would be free to do that, so the government still gets carbon reduction.

With a tax cut/withholding freeze we can buy cars that are new or used. People that don’t have the money to buy a new car even with the government voucher will be able to buy a car under this approach, thus stimulating the economy and reducing their carbon footprint. That means more stimulus and more carbon reduction.

There are many used cars on the market that are relatively new, with modern efficiencies. People that replace old cars with more efficient cars, or replace large cars with smaller cars will stimulate the economy and reduce their carbon footprint. They can do neither if they can’t afford to participate because used cars are not included in the deal.

The Cash for Clunkers program amounts to a tax cut for, (dare I say it?) the wealthy or at least the better off in our society. A real, across the board tax cut delivered by cutting off withholding helps everybody. Fast.

Change I can believe in. Fast.

Tagged as: auto bailout, auto rescue, bailout, carbon, chrysler, chrysler dealer closing, economic crisis, economy, environment, global warming, GM dealer closing, obama, President Obama, tax