Stimulus to help auto industry?

February 8, 2009 4:23:23 PM PST
The auto industry is really watching the stimulus package, which could offer tax breaks to boost car sales. But the wording has buyers and sellers confused about what's under the hood.Car sales have tanked over the last few months, but tax breaks --if they go through-- have even the motor-heads wondering how to put these savings in gear.

Raleigh's Convention Center was packed for a weekend car show after potential buyers and professional sales people have heard a big tax break could come for new cars.

"It's a positive for me if it helps them sell more cars," Leith Acura car salesman Cory King said. "I just hope they can simplify it with what they want to do."

But the idea is not a simple rebate or federal formula for cash back.

"I thought it would be off the sticker automatically," Roanoke Rapid resident Kevin Mallory said.

Instead it's a sales tax and auto loan interest deduction on your federal income taxes. The cost of the tax break would be about $11 billion.

"My wife does my taxes," Mallory said. "She can do it, trust me. I'd hand it over to her and say that's yours."

For example, if Mallory made $100,000 a year, bought a $23,000 Chevy Malibu, then financed with a 5 year, 5 percent loan and paid North Carolina's 3 percent sales tax; he'd save about $1,300 over 5 years.

"Okay, that's not bad, but that's confusing," Mallory said.

King says good luck trying to explain that on the lot.

"The plan so far and the wording of it is a little confusing," King said. "I'm having a hard time figuring it out myself."

He feels Congress should just cut the sales tax.

"The simple way of doing it is a tax free holiday for cars and have the government pay the states for that much needed sales tax," King said.

He also wondered about those in the market for the Maserati.

"Does the guy who can afford a $300,000 car really need an incentive from the government," he said. "Is that $11 billion helping the guy buy his Bentley for a little bit cheaper?"

The tax break would actually cover just the first $50,000. But nothing is final until a stimulus bill finally passes.


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