The bill was created by the auto industry. If you have a class 3 truck they want you to buy another class 3 truck. This is also a way to extend the benefits of the bill all the way down the line to the least efficient vehcles. Otherwise it's only a truck-for-car conversion program.
is rated 20-23 MPG and most would get 3500....camry and Sonata (what I bought) gets you 4500--along with 3,000 rebate for Sonata. No comparison, although I DID like driving the Fusion and the Malibu.
Just for reference: I took my wrecked compact car to the shredder 2 weeks ago. I saved the two doors, hatch, sunroof and headliner, rear bumper, a couple of metal panels, engine and trans, all the front and rear suspension components and the wheels and tires (they deduct $2 - 3.00 per tire from the total if you leave them on). You must also remove the fuel tank, cut it in half and smash it flat leaving it in plain view for inspection. They want the fluids drained, too, but mine didn't have any left. Most facilities have an EPA regulated fluid and hazardous materials reclamation area for dealing with vehicles that come in intact. I took mine on a trailer, towed behind an '01 Pontiac Montana (which does not make the C4C eligibility list) and drove right on the scale for gross weight and again for net weight after they lifted it off the trailer. With all these parts removed the net weight was 1850 lbs and I received $76.00 in cash. I know this car would not have qualified for the C4C program even if it had not been wrecked but it does illustrate some of what the dealers "may" have to go through to get yours shredded. If they only have to break the motor and crush the car that may be significantly easier. They may save money if they drive your trade to the shredder rather than towing them all but I don't know if they'd be allowed to break the engine on the shredder's lot. Also, many of the vehicles being traded in weigh 3 - 4 times what mine was. Do your own math if you want to but I'm sure not going to assume I know what the dealer's scrap profit is. If I'd had someone else tow mine in it would have been a wash. Was it worth the effort? Well, I found it mildly entertaining and if I sell the parts on Craigslist, then maybe. It wasn't much of a car anyway, but it's popular among the economically challenged and making those parts available is more important to me than the dollars I might receive for them.
Speaking of pecuniary matters, what do you think about having to pay for other people's CARS rebates? It only works out to less than $10 per taxpayer but, gosh, a buck is a buck!
It's back on - sort of! Whatever the Senate does the bill will have to wait for the House to return from its Summer recess so nothing will happen until September at least.
That is not true. If the Senate modifies the bill, then nothing will happen until September when the House votes on the modified bill.
My guess is President Obama will push to get the exact bill from the House passed this week. If that does not happen, then C4C is dead for at least a month and I don't think that will happen..
We had everything ready to go after waiting over a week for our van to be listed on cars.gov (which is all the dealer told us we needed). The van shows up on the list and we take everything to the dealer to be told that the van must show up on toyota.com--it didn't. Spoke to several at the dealer and also called the national toyota number. The reason we cannot trade in our van is that it is 125 inches and they will only accept vans up to 124 inches. All we were told is sorry! This is simply ridiculous. I don't know who to complain to!
Speaking of pecuniary matters, what do you think about having to pay for other people's CARS rebates? It only works out to less than $10 per taxpayer but, gosh, a buck is a buck!
It's not that bad, actually. Let's say the average price after the rebate is $20K. The buyer has to pay tax and license on that. Let's assume 10% total. So immediately, the buyer returns $2K to the government revenue. So, essentially, the $4K tax rebate is halved.
And that's not even counting the tax revenue from those who profit from the sale of the cars.
Read CLOSER....those FOR the bill said they have enough votes to DENY the proposed changes and it will go through....
"Following lengthy negotiations, Senate Majority Leader Harry Reid said Democrats and Republicans had agreed to vote on the plan Thursday, along with a series of potential changes to the bill, which was passed by the House last week. Reid has said Democrats have enough votes to approve the measure and reject any changes that would cause an interruption in the rebates."
Let's say the average price after the rebate is $20K.
You're assuming those folks would never have purchased a new vehicle. I think many (most?) put off purchasing to take advantage of the rebate or, perhaps, bought earlier than they might have otherwise. If that's the case then you cannot discount the tax that would have been paid on the rebated portion of the purchase. So, in effect, the taxpayer ends paying twice - once for the lost tax revenue and then for the rebate.
In addition, other businesses may well have seen a downturn in sales with people committing their funds to these car purchases. But that will balance out since those who got the rebates would eventually have bought anyway and they now have an extra $3500-$4500 (of taxpayer money!) to make other purchases. The problem is that those other businesses are being hit at a particularly bad time.
You're assuming those folks would never have purchased a new vehicle. I think many (most?) put off purchasing to take advantage of the rebate or, perhaps, bought earlier than they might have otherwise.
In my case, I would not have bought a vehicle anytime soon if it were not for the C4C rebate. I believe there are many buyers like me, who would otherwise not even be looking at cars were it not for this program.
The exact multiplier effect is hard to calculate, but it is clear that after the government pays the $4K average rebate, the buyer puts in the rest of the purchase price, plus the tax on the total price, and that immediate injection of funds into the economy NOW has a huge impact. The government has to benefit from that, in direct and indirect taxes.
There will be those who find that even $10 of their tax money spent on this program is difficult to stomach. Sort of analogous to those who find it hard to pay property taxes that benefit schools when they do not have kids. And we know how short-sighted that is.
You have a point there - I did not know the House and Senate had identical bills.
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Yes the Senate must pass the identical bill that passed in the House last week or C4C will be put on hold this Friday, 08/07/2009.
Expect the Senate to pass this identical bill, which appropriates an additional $2 billion for C4C, later today (Thursday). President Obama will sign it into law no later than Friday, 08/07/2009.
The additional $2 billion is expected to adequately fund C4C through Labor Day, 09/07/2009, allowing 750,000 units to be sold and receive the C4C voucher.
I'm happy to see this happening. It is a quick and immediate economic stimulus that benefits millions of Americans and the world's economies as well.
But almost certainly you would have bought eventually!
I agree that the time factor matters (both ways!) and that the multiplier effect is difficult to calculate. My point is that there are pluses and minuses so it's not clear whether the net effect is good or bad. Maybe the lesson is that we could have saved hundreds of billions in bail outs and stimulus packages with a little more finesse and a lot less money.
On the other hand, my car does not qualify as a clunker so I cannot take advantage of the program and, therefore, look at the situation somewhat differently than one who can.
But not all taxpayers are equal. Some taxpayers like ExxonMobil pay upwards of $26 Billion. Others like Toyota may only pay say $1-4 Billion. Some large dealerships like CarMax may only pay several hundred millions in taxes.
Obviously those types of companies carry a lot of the tax burden for the rest of us. So to do it correctly you need to look at your tax payments as a part of the total tax collections by the IRS which is $2.2 Trillion. That's your share.
In fact there are 138 million taxpayers but there are 305 million human citizens and millions of other corporate tax 'citizens'.
If you have a $75000 Taxable income* this year you owe about $11000 in taxes. That means that your tax bill is $5 for each $1 Billion collected. If you make less than $75000 taxable income then your tax bill drops sharply to less than $1 for each $1 Billion collected.
*Not AGI...Taxable Income after all deductions, married filing jointly.
HOWEVER...the program pays for itself in 3-5 years. Explanation upon request.
Not exactly. If the Senate and the House pass the same exact bill then there is no need to reconcile any differences.. it goes directly to the President's desk
If the Senate makes any ammendments or changes such as.. Ammendment: 'Puppies are nice' ..then this key point has to wait until September until to be resolved.
No ammendments or changes, then it gets passed right away.
And I've got pretty good money that says these clowns in DC pass this sucker WITHOUT amendments, changes, pet wording etc. This baby has so much press covering it right now, the average citizen can't help but be dialed into what is happening on car lots all across the country. Political suicide if you ask me if one were to step in front of this train in an attempt to derail. These guys and gals who have seized our political apparatus in this country for the foreseeable future may be clowns but they aren't stupid. Self preservation above all else. CFC extension is going to Barry's desk for the big signing ceremony.
PS Just as 'spy here said it would back in June/July btw. Good call.
Don Asay – A Determined 1997 Jeep Wranger Owner Here is the email that Don Asay from Massachusetts sent us:
I got the car on the list. It only took about 14 phone calls and 40 e-mails to various people at the EPA. The major problem is that the EPA while given oversight of fueleconomy.gov (final decider of qualification) was not given any additional funding or staffing to help implement this program. This has left them in a bind when it comes to getting everything updated.
I read the legislation and determined that the EPA was who I needed to contact to get this fixed. After trying to use the various toll free numbers to get the car added and spending a large amount of time in endless phone trees I decided to try a different approach.
I began my process by spidering the EPA site and then using regular expressions to search the EPA site for anything resembling a phone number. This returned several bookmarked pages with people’s names and phone numbers. I then began picking out people with important sounding titles and started calling them individually. I had to call about 8 different people before I found someone who answered the phone and was willing to listen and get me in contact with the correct person.
Eventually I was put in contact with Cathy Milbourn (Milbourn.Cathy@epa.gov) from public relations who tried to answer my questions (she sent along those PDFs that you posted on your site). She did a great job, but was super busy as such she didn’t keep me in the loop and was hard to get a hold of.
She ultimately had to forward my information on to their program office, she did this as soon as I sent the information in, but didn’t tell me she did so. In the mean time I realized that all EPA e-mail addresses are formatted as Lastname.Firstname@epa.gov, so I started e-mailing different people in different divisions to try and get some attention brought to this case.
Not hearing anything about what was going on I went and e-mailed two of my congressmen and both of the senators from Massachusetts (all of whom supported the bill) and copied her on these e-mails. I had to search the internet for the congressmen and senator’s actual e-mail addresses as opposed to the e-mail forms on their website(this was a lot of work).
Writing to the congressmen and senators and copying her on the e-mails got her to e-mail me back really quickly, she informed me that she had already forwarded the details to the programs department and that I would hear something shortly. I asked her who I should be expecting to receive an e-mail from, and using the previously determined e-mail standard lastname.firstname@epa.gov I preemptively e-mailed them (unexpectedly as Cathy had not given me their e-mail addresses or phone numbers) till they called me.
The person who called me asked that I not share her contact information, as she is one of only 3 people who do the updating, and that additional calls will delay her getting the extra data loaded on the site. She informed that they they act on all requests sent from anyone in public relations, and that there are a few other cars they need to add. Mine got put to the front of the list because of my persistent e-mailing and copying everyone on the e-mail chain (senators and congressmen included). Classic case of the squeaky wheel gets the grease, the information I needed was added about an hour ago.
At this point any data they put on has to be accurate to the third decimal point, and anything up there as of now should not change. Needing to be this accurate (even though this level of accuracy is not shown to the public) puts them in a bind in terms of what they can put up there. All in all not a bad job getting a mostly complete list together especially considering they had 30 days to get 30,000 different models and types of cars across the past 25 years.
Over the next couple of days the EPA is expecting to get a new form put on their website where owners can submit missing cars, and should be improving the phone tree to include an option to add a car that is missing. Their phone tree received over 50,000 phone calls in the last 2 days.
So the short version (my opinon and spin) it was a lot of work and a lot of phone calls and unless someone is doggedly determined to go through a similar process, it will just be up to timing to see if the money runs out before the data is fully updated. I doubt a car salesman would be willing to go through this amount of work for a sale, and most consumers are not web savvy enough to piece this much stuff together (especially finding their respective congressmen and senators actual e-mail addresses).
A CARS Winner Don wins a gold medal for his determination and anyone who owns a 1997 Jeep Wrangler who was previously locked out of the CARS program, should thank him when you pickup your new car.
Speaking of pecuniary matters, what do you think about having to pay for other people's CARS rebates?
While C4C seems to have generated visible results. I am opposed to all bailouts. Especially AIG, GM, C & others. This is just an extension of the auto bailouts. I really don't think it will kick start the economy. Except for a handful of car dealers. Kind of sad that Uncle Sam randomly killed 2400 dealerships just before they handed out the free lunches. I am sure the 24,000 plus people that our government put out of work would have liked a piece of the pie.
So even though I considered using C4C, and may still, I am opposed to the program.
All we were told is sorry! This is simply ridiculous. I don't know who to complain to! Complain to your Senator's and congressman. Not that they will listen. Many parts of the country dealers have quit taking clunkers period as they are afraid the money has already run out. You might think about switching to a more friendly brand of vehicle also. Why the Toyota dealer would go through anything but the CARS.GOV is strange.
Kind of sad that Uncle Sam randomly killed 2400 dealerships just before they handed out the free lunches. I am sure the 24,000 plus people that our government put out of work would have liked a piece of the pie.
"Uncle Sam" didn't "randomly kill" dealerships, as I am sure you are aware. Both GM and Chrysler management decided which dealerships to close, based on the priorities of the automakers themselves. And in GM's case, the "killed" dealerships are still operating until the end of their existing franchise agreements. Chrysler did terminate dealerships on very short notice, as they are permitted to do under bankruptcy law, but again, the company did it, based on volume and performance, not on a throw of the dice or a draw of the cards.
On the other hand, my car does not qualify as a clunker so I cannot take advantage of the program...
and while those who want to dump their clunkers may have moved up purchases, those who don't want to or don't have one may decide to delay vehicle purchases because of the mad rush of clunker buyers gobbling everything up and driving actual selling prices higher.
This guy was tenacious. Hope he's able to get rid of his Jeep.
This brings up a couple of interesting points.
1. Knowing the format of the organizations email addresses can be a big help. I have used this trick myself to send emails to, for instance, the head of the Board of Education.
2. Finding the right person in an organization such as the EPA is a daunting task. Sometimes, you just get lucky.
3. Like many government programs/mandates , sounds like this one came without any additional funds to the EPA (and probably NHTSA also) to implement the law. Hence, workers were forced to scramble to implement to program with no additional resources provided. Given the short time fuse involved, it's a miracle they got anything working at all.
Like many government programs/mandates , sounds like this one came without any additional funds to the EPA (and probably NHTSA also) to implement the law.
NHTSA was allowed to use $50 million of the $1B appropriation for administrative costs. It doesn't appear that EPA was given any additional funds at all, probably because Congress (like the rest of us) erroneously believed EPA's job was already done with regard to the fuel economy database.
There will be those who find that even $10 of their tax money spent on this program is difficult to stomach. Sort of analogous to those who find it hard to pay property taxes that benefit schools when they do not have kids. And we know how short-sighted that is.
I have a bit of the same sentiment, but look at it this way...all those kids that we're paying for to go to school will one day become wage earners, and contribute to that ponzi scheme we call "Social Security"! And chances are, us older people are going to see more of a return on that then the kids ever will. And if the kids don't get an education, then they might not become productive members of society. And if they end up on welfare, prison, etc, they'll end up costing us taxpayers more than their education would.
But it is kinda annoying that I, a homeowner with no kids, provide funding for the public school system while the renters next door, with their 3 kids, pay nothing. Sure, their landlord does, but the renters get off scott free.
But then, you can claim property taxes as a deduction on your income tax, while they can't claim their rent, so I guess it more or less comes out in the wash.
The government has to benefit from that, in direct and indirect taxes.
When you pay your $2000 in sales tax on your new car it goes to the state, county and city. Uncle Sam allows you to write that off as a deduction. So if you are in the 25% bracket that is an additional cost to the Federal government of $500 dollars. Raising the clunker cost to US the taxpayer, to $5000 per vehicle. I also do not buy all the residual taxes being paid. Most every entity in the auto industry is losing money. That means they are not paying US in taxes. I can see the auto industry becoming the same as the farm industry. A constant drain on the tax payers of this country.
The bright side is most of the folks using the program are tax payers getting back a bit of what they contribute. The auto industry as a whole are just welfare recipients.
I have been trying to get my 1998 GMC Suburban 1500 4WD on the list for a week now. It is also missing in '99 as is the Chevy version. It's there for a buch of differant years though. This is sooooo frustrating and makes no sense. All I can figure is for those 2 years it was mis-catergorized by the EPA and now they are having problems undoing that. Come on, though! If the same exact vehicle is on the list. Is anyone else in the same boat? Can anyone help?
Both GM and Chrysler management decided which dealerships to close, based on the priorities of the automakers themselves.
You can believe what you like. I will wait to hear what the courts and Congress say about the dealers that were cut. There was retribution involved. The dealers should have been allowed to die of natural causes.
The dealers should have been allowed to die of natural causes.
This is entirely wrong thread to have this discussion.
But at least in my area the dealers they cut were already dead just on life support. One of the dodge dealers only sold a handful of new cars a year and only had three new cars in stock when they announced the closure. One of the other ones was dodge/nissan but had almost no new dodges in stock. Oh and there was a large brand new Chrysler/Jeep store less then a mile down the same road. Kill his dodge dealership and give it to the brand new Chrysler/Jeep place.
I have been trying to get my 1998 GMC Suburban 1500 4WD on the list for a week now. It is also missing in '99 as is the Chevy version. It's there for a buch of differant years though. This is sooooo frustrating and makes no sense. All I can figure is for those 2 years it was mis-catergorized by the EPA and now they are having problems undoing that. Come on, though! If the same exact vehicle is on the list. Is anyone else in the same boat? Can anyone help?
Apparently you should contact Cathy Milbourn (Milbourn.Cathy@epa.gov).
The Edmunds clunker list shows a 1998 Mercury Sable is eligible. This is at odds with the Govt web site - no Sable is eligible. Is the Edmunds list wrong? It only shows 1998 not other years which is very suspicious.
only to find out different. Seems to me a saavy car dealer could easily steer such a person over to a used car (where profits are higher anyway). Any salespeople care to comment???
Your post makes it sound like we are manipulating people
Fact is people are not that stupid... yes people come in thinking they qualify but fact is if they don't they are still at the dealership for a reason :surprise: They need a new car. If they don't qualify for the govt rebate why not look at a used vehicle and save some money?
I think people forget how integrated and important car dealerships are to the community. Car purchases are 2nd most expensive purchase people generally make. This puts lots of additional revenue into the state government's hands. Many states are facing deficits because of loss income due to high unemployment. Also it will allow many car manufacturers to increase production to replace the cars sold which helps vendors and suppliers. And keep Americans working.
Yes - Ford's compact Focus and small SUV the Escape have been moving well. The 4-cylinder Fusion is another good choice.
I use to work at a major automotive bearing plant (NSK) and the water pump bearings for 4-cylinder engines are certain to be a hot item right with all the new car sales.
The Toyota Camry has more NSK bearings in it than any other car on the road. I imagine NSK is calling back some laid off workers, working some overtime and their employee's will have some extra money because of C4C. That's what this program is all about.
For accuracy's sake, several business assumptions. 1. This program will create the intended 10% bump in automotive sales. This would be 250,000 units per $1 Billion injected. 2. The average rebate will be $4000 per vehicle. 3. The average front end commisionable margin on the sale is $1000. The average commisionable margin on the back end is $500. Commission rate is 25%. 4. The average net profit at the dealer level is $1000 5. The average gross margin at the manufacturer's level is 15% EBITDA 6. The typical marginal tax rate for individuals is 20% 7. The typical corporate Federal tax rate is 40% for round numbers ( 39% actually )
So the process... a. An extra sale is made. b. The salesperson makes 25% on $1000 or $250...the IRS gets $50 c. The back end makes 25% on $500 or $125...the IRS gets $25 d. The auto dealer makes $1000 overall on the sale...the IRS gets $400 e. Suppliers to the auto dealer get a 10% boost in sales....and the IRS gets a 10% boost in its tax revenue from these companies. f. Intermediaries such as truckers and railroads get a 10% boost in their revenues...and the IRS gets a 10% boost in its tax revenues from these companies g. On a $15000 sale to a dealer the automaker has a 15% gross margin EBITDA or about $2200...the IRS gets ~ $600 of this. h. The suppliers, contractors and companies supporting the automaker also get a 10% boost in revenue....the IRS gets a 10% boost in tax receipts. i. The millions of workers throughout the entire transaction cycle also see a 10% boost in work...unless on salary they get paid 10% more money...the IRS gets 10% more tax revenue from every one of these workers.
Then there's the states........ a. Right away the state sales tax revenues on vehicles jump by 10%...for those states that have sales taxes. b. See above a. thru i. for state income taxes....for those states that have income taxes.
The withholdings from millions of workers associated with the auto industry and the taxes paid by a multitude of suppliers and contractors are too complex to quantify other than to say that these revenues to the IRS are increased by 10%. Defining that number would require a complex economic model that none of us has access to at this time.
However in looking at only the initial $4000 payment on one single vehicle the net cost to the US Government - taking into account only the dealerships and automakers - is ~$2900. $4000 - 50 - 25 -400 -600 ====== $2900 +/- x 250,000 units = $725 Million...not $1 Billion This disregards all the benefits to the state and local governments.
The key point is that this boost and stimulation of the business level is also a boost and stimulation of the tax receipts to the IRS. Uncle Sam giveth with one hand, taketh with the other hand.
Then there's the money that won't be spent by these 250,000 drivers on fuel over the next several years. Here's a very brief summary.
The initial data suggests that based only on the CARS.gov website that the vehicles being purchased gain ~9.5 mpg vs the clunkers being traded in. In fact from talking to the public these clunkers are far far far below the website numbers. "15 MPG???? not since the turn of the century!!!!! Maybe now it gets 11 mpg.". But using the DOT data let's assume a gain of 10 MPG per vehicle which seems about right over the last week.
If the average clunker was being driven 10000 miles annually ( the average driver now drives 15000 miles annually ) the fuel saved on every one of these vehicles is 10000 / 15 mpg = 667 gal 10000 / 25 mpg = 400 gal Net savings...... = 267 gal annually
267 x 250,000 x $2.50/gal x 5 yrs = $800+ million 267 x 250,000 x $3.00/gal x 5 yrs = $1 Billion 267 x 250,000 x $3.50/gal x 5 yrs = $1.2 Billion
If the 250,000 buyers did not give up their clunkers and nothing changed at all then over the next 5 yrs or so these drivers would have given about $1 Billion of our money to the refiners, oil companies and oil producers and there would be hundreds of millions of gallons of extra fuel burned. The money was going to be spent one way or another by these 250,000 drivers. Either it was going to the oil industry and producers helping to support Iran, Saudi, Venezuela and Russia....or it was staying here in the US to generate additional tax revenue and to support local business employing millions of workers.
Now multiply this by each new group of 250,000 dropping off their clunkers.
Comments
Thanks to everybody who replied to my question!!
What if a truck owner doesn't want to own a car?
I learn something new every day on Edmund's
And the best part of it was that we didn't charge you a penny for it! :P
tidester, host
SUVs and Smart Shopper
I took mine on a trailer, towed behind an '01 Pontiac Montana (which does not make the C4C eligibility list) and drove right on the scale for gross weight and again for net weight after they lifted it off the trailer. With all these parts removed the net weight was 1850 lbs and I received $76.00 in cash.
I know this car would not have qualified for the C4C program even if it had not been wrecked but it does illustrate some of what the dealers "may" have to go through to get yours shredded. If they only have to break the motor and crush the car that may be significantly easier. They may save money if they drive your trade to the shredder rather than towing them all but I don't know if they'd be allowed to break the engine on the shredder's lot. Also, many of the vehicles being traded in weigh 3 - 4 times what mine was. Do your own math if you want to but I'm sure not going to assume I know what the dealer's scrap profit is.
If I'd had someone else tow mine in it would have been a wash. Was it worth the effort? Well, I found it mildly entertaining and if I sell the parts on Craigslist, then maybe. It wasn't much of a car anyway, but it's popular among the economically challenged and making those parts available is more important to me than the dollars I might receive for them.
Murdoch thinks he will be able to charge for web content. Not from me he won't. Nor will any other online service.
tidester, host
SUVs and Smart Shopper
tidester, host
SUVs and Smart Shopper
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That is not true. If the Senate modifies the bill, then nothing will happen until September when the House votes on the modified bill.
My guess is President Obama will push to get the exact bill from the House passed this week. If that does not happen, then C4C is dead for at least a month and I don't think that will happen..
I thought I said that?
tidester, host
SUVs and Smart Shopper
It's not that bad, actually. Let's say the average price after the rebate is $20K. The buyer has to pay tax and license on that. Let's assume 10% total. So immediately, the buyer returns $2K to the government revenue. So, essentially, the $4K tax rebate is halved.
And that's not even counting the tax revenue from those who profit from the sale of the cars.
The government giveth, and the govenrment taketh.
"Following lengthy negotiations, Senate Majority Leader Harry Reid said Democrats and Republicans had agreed to vote on the plan Thursday, along with a series of potential changes to the bill, which was passed by the House last week. Reid has said Democrats have enough votes to approve the measure and reject any changes that would cause an interruption in the rebates."
tidester, host
SUVs and Smart Shopper
You're assuming those folks would never have purchased a new vehicle. I think many (most?) put off purchasing to take advantage of the rebate or, perhaps, bought earlier than they might have otherwise. If that's the case then you cannot discount the tax that would have been paid on the rebated portion of the purchase. So, in effect, the taxpayer ends paying twice - once for the lost tax revenue and then for the rebate.
In addition, other businesses may well have seen a downturn in sales with people committing their funds to these car purchases. But that will balance out since those who got the rebates would eventually have bought anyway and they now have an extra $3500-$4500 (of taxpayer money!) to make other purchases. The problem is that those other businesses are being hit at a particularly bad time.
tidester, host
SUVs and Smart Shopper
In my case, I would not have bought a vehicle anytime soon if it were not for the C4C rebate. I believe there are many buyers like me, who would otherwise not even be looking at cars were it not for this program.
The exact multiplier effect is hard to calculate, but it is clear that after the government pays the $4K average rebate, the buyer puts in the rest of the purchase price, plus the tax on the total price, and that immediate injection of funds into the economy NOW has a huge impact. The government has to benefit from that, in direct and indirect taxes.
There will be those who find that even $10 of their tax money spent on this program is difficult to stomach. Sort of analogous to those who find it hard to pay property taxes that benefit schools when they do not have kids. And we know how short-sighted that is.
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Yes the Senate must pass the identical bill that passed in the House last week or C4C will be put on hold this Friday, 08/07/2009.
Expect the Senate to pass this identical bill, which appropriates an additional $2 billion for C4C, later today (Thursday). President Obama will sign it into law no later than Friday, 08/07/2009.
The additional $2 billion is expected to adequately fund C4C through Labor Day, 09/07/2009, allowing 750,000 units to be sold and receive the C4C voucher.
I'm happy to see this happening. It is a quick and immediate economic stimulus that benefits millions of Americans and the world's economies as well.
But almost certainly you would have bought eventually!
I agree that the time factor matters (both ways!) and that the multiplier effect is difficult to calculate. My point is that there are pluses and minuses so it's not clear whether the net effect is good or bad. Maybe the lesson is that we could have saved hundreds of billions in bail outs and stimulus packages with a little more finesse and a lot less money.
On the other hand, my car does not qualify as a clunker so I cannot take advantage of the program and, therefore, look at the situation somewhat differently than one who can.
tidester, host
SUVs and Smart Shopper
Obviously those types of companies carry a lot of the tax burden for the rest of us. So to do it correctly you need to look at your tax payments as a part of the total tax collections by the IRS which is $2.2 Trillion. That's your share.
In fact there are 138 million taxpayers but there are 305 million human citizens and millions of other corporate tax 'citizens'.
If you have a $75000 Taxable income* this year you owe about $11000 in taxes. That means that your tax bill is $5 for each $1 Billion collected. If you make less than $75000 taxable income then your tax bill drops sharply to less than $1 for each $1 Billion collected.
*Not AGI...Taxable Income after all deductions, married filing jointly.
HOWEVER...the program pays for itself in 3-5 years. Explanation upon request.
If the Senate makes any ammendments or changes such as.. Ammendment: 'Puppies are nice' ..then this key point has to wait until September until to be resolved.
No ammendments or changes, then it gets passed right away.
http://blogs.edmunds.com/greencaradvisor/2009/08/obama-administration-to-award-2- 4-billion-today-to-advance-ev-development.html
You're absolutely right! And, oh, by the way, I pay Exxon-Mobile's taxes on their behalf as do you and everyone else who drives. :P
Nevertheless, you make a valid point on taxes overall but you have piqued my curiosity. How does the program pay for itself in 3-5 years?
tidester, host
SUVs and Smart Shopper
I love the fog lights,the mud flaps and the hide a trucnk feature,too.
tidester, host
SUVs and Smart Shopper
PS Just as 'spy here said it would back in June/July btw. Good call.
EPA red tape success story
Don Asay – A Determined 1997 Jeep Wranger Owner
Here is the email that Don Asay from Massachusetts sent us:
I got the car on the list. It only took about 14 phone calls and 40 e-mails to various people at the EPA. The major problem is that the EPA while given oversight of fueleconomy.gov (final decider of qualification) was not given any additional funding or staffing to help implement this program. This has left them in a bind when it comes to getting everything updated.
I read the legislation and determined that the EPA was who I needed to contact to get this fixed. After trying to use the various toll free numbers to get the car added and spending a large amount of time in endless phone trees I decided to try a different approach.
I began my process by spidering the EPA site and then using regular expressions to search the EPA site for anything resembling a phone number. This returned several bookmarked pages with people’s names and phone numbers. I then began picking out people with important sounding titles and started calling them individually. I had to call about 8 different people before I found someone who answered the phone and was willing to listen and get me in contact with the correct person.
Eventually I was put in contact with Cathy Milbourn (Milbourn.Cathy@epa.gov) from public relations who tried to answer my questions (she sent along those PDFs that you posted on your site). She did a great job, but was super busy as such she didn’t keep me in the loop and was hard to get a hold of.
She ultimately had to forward my information on to their program office, she did this as soon as I sent the information in, but didn’t tell me she did so. In the mean time I realized that all EPA e-mail addresses are formatted as Lastname.Firstname@epa.gov, so I started e-mailing different people in different divisions to try and get some attention brought to this case.
Not hearing anything about what was going on I went and e-mailed two of my congressmen and both of the senators from Massachusetts (all of whom supported the bill) and copied her on these e-mails. I had to search the internet for the congressmen and senator’s actual e-mail addresses as opposed to the e-mail forms on their website(this was a lot of work).
Writing to the congressmen and senators and copying her on the e-mails got her to e-mail me back really quickly, she informed me that she had already forwarded the details to the programs department and that I would hear something shortly. I asked her who I should be expecting to receive an e-mail from, and using the previously determined e-mail standard lastname.firstname@epa.gov I preemptively e-mailed them (unexpectedly as Cathy had not given me their e-mail addresses or phone numbers) till they called me.
The person who called me asked that I not share her contact information, as she is one of only 3 people who do the updating, and that additional calls will delay her getting the extra data loaded on the site. She informed that they they act on all requests sent from anyone in public relations, and that there are a few other cars they need to add. Mine got put to the front of the list because of my persistent e-mailing and copying everyone on the e-mail chain (senators and congressmen included). Classic case of the squeaky wheel gets the grease, the information I needed was added about an hour ago.
At this point any data they put on has to be accurate to the third decimal point, and anything up there as of now should not change. Needing to be this accurate (even though this level of accuracy is not shown to the public) puts them in a bind in terms of what they can put up there. All in all not a bad job getting a mostly complete list together especially considering they had 30 days to get 30,000 different models and types of cars across the past 25 years.
Over the next couple of days the EPA is expecting to get a new form put on their website where owners can submit missing cars, and should be improving the phone tree to include an option to add a car that is missing. Their phone tree received over 50,000 phone calls in the last 2 days.
So the short version (my opinon and spin) it was a lot of work and a lot of phone calls and unless someone is doggedly determined to go through a similar process, it will just be up to timing to see if the money runs out before the data is fully updated. I doubt a car salesman would be willing to go through this amount of work for a sale, and most consumers are not web savvy enough to piece this much stuff together (especially finding their respective congressmen and senators actual e-mail addresses).
A CARS Winner
Don wins a gold medal for his determination and anyone who owns a 1997 Jeep Wrangler who was previously locked out of the CARS program, should thank him when you pickup your new car.
While C4C seems to have generated visible results. I am opposed to all bailouts. Especially AIG, GM, C & others. This is just an extension of the auto bailouts. I really don't think it will kick start the economy. Except for a handful of car dealers. Kind of sad that Uncle Sam randomly killed 2400 dealerships just before they handed out the free lunches. I am sure the 24,000 plus people that our government put out of work would have liked a piece of the pie.
So even though I considered using C4C, and may still, I am opposed to the program.
Complain to your Senator's and congressman. Not that they will listen. Many parts of the country dealers have quit taking clunkers period as they are afraid the money has already run out. You might think about switching to a more friendly brand of vehicle also. Why the Toyota dealer would go through anything but the CARS.GOV is strange.
"Uncle Sam" didn't "randomly kill" dealerships, as I am sure you are aware. Both GM and Chrysler management decided which dealerships to close, based on the priorities of the automakers themselves. And in GM's case, the "killed" dealerships are still operating until the end of their existing franchise agreements. Chrysler did terminate dealerships on very short notice, as they are permitted to do under bankruptcy law, but again, the company did it, based on volume and performance, not on a throw of the dice or a draw of the cards.
So enough with the willful distortions, OK?
and while those who want to dump their clunkers may have moved up purchases, those who don't want to or don't have one may decide to delay vehicle purchases because of the mad rush of clunker buyers gobbling everything up and driving actual selling prices higher.
This brings up a couple of interesting points.
1. Knowing the format of the organizations email addresses can be a big help. I have used this trick myself to send emails to, for instance, the head of the Board of Education.
2. Finding the right person in an organization such as the EPA is a daunting task. Sometimes, you just get lucky.
3. Like many government programs/mandates , sounds like this one came without any additional funds to the EPA (and probably NHTSA also) to implement the law. Hence, workers were forced to scramble to implement to program with no additional resources provided. Given the short time fuse involved, it's a miracle they got anything working at all.
NHTSA was allowed to use $50 million of the $1B appropriation for administrative costs. It doesn't appear that EPA was given any additional funds at all, probably because Congress (like the rest of us) erroneously believed EPA's job was already done with regard to the fuel economy database.
I have a bit of the same sentiment, but look at it this way...all those kids that we're paying for to go to school will one day become wage earners, and contribute to that ponzi scheme we call "Social Security"! And chances are, us older people are going to see more of a return on that then the kids ever will. And if the kids don't get an education, then they might not become productive members of society. And if they end up on welfare, prison, etc, they'll end up costing us taxpayers more than their education would.
But it is kinda annoying that I, a homeowner with no kids, provide funding for the public school system while the renters next door, with their 3 kids, pay nothing. Sure, their landlord does, but the renters get off scott free.
But then, you can claim property taxes as a deduction on your income tax, while they can't claim their rent, so I guess it more or less comes out in the wash.
When you pay your $2000 in sales tax on your new car it goes to the state, county and city. Uncle Sam allows you to write that off as a deduction. So if you are in the 25% bracket that is an additional cost to the Federal government of $500 dollars. Raising the clunker cost to US the taxpayer, to $5000 per vehicle. I also do not buy all the residual taxes being paid. Most every entity in the auto industry is losing money. That means they are not paying US in taxes. I can see the auto industry becoming the same as the farm industry. A constant drain on the tax payers of this country.
The bright side is most of the folks using the program are tax payers getting back a bit of what they contribute. The auto industry as a whole are just welfare recipients.
You can believe what you like. I will wait to hear what the courts and Congress say about the dealers that were cut. There was retribution involved. The dealers should have been allowed to die of natural causes.
This is entirely wrong thread to have this discussion.
But at least in my area the dealers they cut were already dead just on life support. One of the dodge dealers only sold a handful of new cars a year and only had three new cars in stock when they announced the closure. One of the other ones was dodge/nissan but had almost no new dodges in stock. Oh and there was a large brand new Chrysler/Jeep store less then a mile down the same road. Kill his dodge dealership and give it to the brand new Chrysler/Jeep place.
Apparently you should contact Cathy Milbourn (Milbourn.Cathy@epa.gov).
Your post makes it sound like we are manipulating people
Fact is people are not that stupid... yes people come in thinking they qualify but fact is if they don't they are still at the dealership for a reason :surprise: They need a new car. If they don't qualify for the govt rebate why not look at a used vehicle and save some money?
GP
Looks like Ford is benefiting from this program?
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Yes - Ford's compact Focus and small SUV the Escape have been moving well. The 4-cylinder Fusion is another good choice.
I use to work at a major automotive bearing plant (NSK) and the water pump bearings for 4-cylinder engines are certain to be a hot item right with all the new car sales.
The Toyota Camry has more NSK bearings in it than any other car on the road. I imagine NSK is calling back some laid off workers, working some overtime and their employee's will have some extra money because of C4C. That's what this program is all about.
1. This program will create the intended 10% bump in automotive sales. This would be 250,000 units per $1 Billion injected.
2. The average rebate will be $4000 per vehicle.
3. The average front end commisionable margin on the sale is $1000. The average commisionable margin on the back end is $500. Commission rate is 25%.
4. The average net profit at the dealer level is $1000
5. The average gross margin at the manufacturer's level is 15% EBITDA
6. The typical marginal tax rate for individuals is 20%
7. The typical corporate Federal tax rate is 40% for round numbers ( 39% actually )
So the process...
a. An extra sale is made.
b. The salesperson makes 25% on $1000 or $250...the IRS gets $50
c. The back end makes 25% on $500 or $125...the IRS gets $25
d. The auto dealer makes $1000 overall on the sale...the IRS gets $400
e. Suppliers to the auto dealer get a 10% boost in sales....and the IRS gets a 10% boost in its tax revenue from these companies.
f. Intermediaries such as truckers and railroads get a 10% boost in their revenues...and the IRS gets a 10% boost in its tax revenues from these companies
g. On a $15000 sale to a dealer the automaker has a 15% gross margin EBITDA or about $2200...the IRS gets ~ $600 of this.
h. The suppliers, contractors and companies supporting the automaker also get a 10% boost in revenue....the IRS gets a 10% boost in tax receipts.
i. The millions of workers throughout the entire transaction cycle also see a 10% boost in work...unless on salary they get paid 10% more money...the IRS gets 10% more tax revenue from every one of these workers.
Then there's the states........
a. Right away the state sales tax revenues on vehicles jump by 10%...for those states that have sales taxes.
b. See above a. thru i. for state income taxes....for those states that have income taxes.
The withholdings from millions of workers associated with the auto industry and the taxes paid by a multitude of suppliers and contractors are too complex to quantify other than to say that these revenues to the IRS are increased by 10%. Defining that number would require a complex economic model that none of us has access to at this time.
However in looking at only the initial $4000 payment on one single vehicle the net cost to the US Government - taking into account only the dealerships and automakers - is ~$2900.
$4000
- 50
- 25
-400
-600
======
$2900 +/- x 250,000 units = $725 Million...not $1 Billion
This disregards all the benefits to the state and local governments.
The key point is that this boost and stimulation of the business level is also a boost and stimulation of the tax receipts to the IRS. Uncle Sam giveth with one hand, taketh with the other hand.
Then there's the money that won't be spent by these 250,000 drivers on fuel over the next several years. Here's a very brief summary.
The initial data suggests that based only on the CARS.gov website that the vehicles being purchased gain ~9.5 mpg vs the clunkers being traded in. In fact from talking to the public these clunkers are far far far below the website numbers. "15 MPG???? not since the turn of the century!!!!! Maybe now it gets 11 mpg.". But using the DOT data let's assume a gain of 10 MPG per vehicle which seems about right over the last week.
If the average clunker was being driven 10000 miles annually ( the average driver now drives 15000 miles annually ) the fuel saved on every one of these vehicles is
10000 / 15 mpg = 667 gal
10000 / 25 mpg = 400 gal
Net savings...... = 267 gal annually
267 x 250,000 x $2.50/gal x 5 yrs = $800+ million
267 x 250,000 x $3.00/gal x 5 yrs = $1 Billion
267 x 250,000 x $3.50/gal x 5 yrs = $1.2 Billion
If the 250,000 buyers did not give up their clunkers and nothing changed at all then over the next 5 yrs or so these drivers would have given about $1 Billion of our money to the refiners, oil companies and oil producers and there would be hundreds of millions of gallons of extra fuel burned. The money was going to be spent one way or another by these 250,000 drivers. Either it was going to the oil industry and producers helping to support Iran, Saudi, Venezuela and Russia....or it was staying here in the US to generate additional tax revenue and to support local business employing millions of workers.
Now multiply this by each new group of 250,000 dropping off their clunkers.