Buy a car, get a (tax) break
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Bad news travels fast in Washington.
On the same day automakers reported their worst January sales in the U.S. in 27 years, the Senate voted to approve a tax break for Americans who take the incredibly bold step of walking into a showroom and — gasp! — buy a new car.
The amendment, brainchild of Sen. Barbara Mikulski (D-Md.), would allow buyers to claim an income tax deduction for the sales tax they pay on a vehicle purchase and for the interest on their loan. The tax break would be available to individuals making up to $125,000 a year and to couples making up to $250,000.
The tax break apparently would be retroactive, covering new vehicles purchased between Nov. 12, 2008, and Dec. 31, 2009, according to Mikulski’s office.
“My amendment is simple,†the senator said in a statement. “If you buy a new passenger car, minivan, or light truck by December 31st of 2009, you will get a tax deduction for your sales or excise tax and the interest on your loan.
“A family would save about $1,500 on a $25,000 car, not counting the additional incentives from dealers.â€
Of course, nothing is really simple in our nation’s capital, where even used car dealers are advised to keep a hand on their wallets at all times. As its nomenclature implies, Mikulski’s amendment simply amends the economic stimulus bill now being debated — heatedly, it should be noted — in the Senate.
Even if that bill makes it through the Senate, the vehicle tax deduction isn’t in the House version of the stimulus package, so a conference committee would have to decide whether it stays or goes.
As Automotive News reported, critics think the tax break is too “delayed action†in nature to do much to help pull the economy out of its current doldrums, not to mention light a spark under the worst car market since what was good for General Motors actually was good for the country.
After all, except for the half a dozen or so folks who actually bought a car during the last six weeks of ’08, the tax break won’t do anyone any good until they start filling out their 2009 tax return — in other words, about a year from now.
-- Martin Zimmerman