Did you know the discount you received on a "clunker" was taxable income?
Funny how the government did not require this bit of information to be displayed by the car dealers - another example of full disclosure. Can you imagine how the same government would view a mortgage application sans such a vital disclosure?

Here's the new Math:

It's worse than you might have thought. Ignore all the gas crap and just look at how the stupid car buyer got taken to the cleaners:

If you traded in a clunker worth $3500, you get $4500 off for an apparent "saving s" of $1000.

However, you have to pay taxes on the $4500 come April 15th (something that no auto dealer will tell you). If you are in the 30% tax bracket, you will pay $1350 on that $4500.

So, rather than save $1000, you actually pay an extra $350 to the feds.
In addition, you traded in a car that was most likely paid for. Now you have 4 or 5 years of payments on a car that you did not need, that was costing you less to run than the payments that you will now be making.

But wait, it gets even better: you also got ripped off by the dealer.
For example, every dealer here in LA was selling the Ford Focus with all the goodies including A/C, auto transmission, power windows, etc for $12,500 the month before the "cash for clunkers" program started.

When "cash for clunkers" came along, they stopped discounting them and instead sold them at the list price of $15,500. So, you
paid $3000 more than you would have the month before. (Honda, Toyota , and Kia played the same list price game as Ford and GM.

So let's do the final tally here:

You traded in a car worth: $3500
You got a discount of: $4500
---------
Net so far + $1000
But you have to pay: $1350 in taxes on the $4500
--------
Net so far: - $350
And you paid: $3000 more than the car was selling for the month before
----------
Net - $3350

We could also add in the additional taxes (sales tax, state tax, etc.)
on the extra $3000 that you paid for the car, along with the 5 years of interest on the car loan but lets just stop here.

So who actually made out on the deal? The feds collected taxes on the car along with taxes on the $4500 they "gave" you. The car dealers made an extra $3000 or more on every car they sold along with the kickbacks from the manufacturers and the loan companies. The manufacturers got to dump lots of cars they could not give away the month before. And the poor stupid consumer got saddled with even more debt that they cannot afford.

Our Chief CEO and his band of merry men convinced Joe consumer that he was getting $4500 in "free" money from the "government"
when in fact Joe was giving away his $3500 car and paying an additional $3350 for the privilege.

They may have thought change was good, but I doubt they realized it would be coming out of their wallet.

I heard that the actual cost to the government (tax payers) for each deal made is $24,000...

Surprise surprise!

Financial advisor Dave Ramsey's take:

quote:

Dave's take on Cash for Clunkers
Monday, Jul 27 in Cars | Comments (201)

Question: Listener wants to know Dave's thoughts on the Cash for Clunkers program. Dave doesn't like it for a few reasons.

Dave Ramsey's advice: It turns my stomach. It will get people involved in car deals that they don't need to be in, all in the name of government help. Any time you hear the cavalry coming, keep in mind that they work for the government. With the government, there is always a hook and a twist, and if you have to go into debt to get a "deal", that's a stupid idea. You are much better off to drive your clunker.

http://beta.daveramsey.com/ind...on-Cash-for-Clunkers

Chances are, if sounds too good to be true.......

the goverment is allways screwing us over some how

Same type of scam with the 1st time homebuyer's credit...you have to pay it back on your income taxes for the next 10 years!

Boy....that sucks...glad I didn't do it.

The sad deal is all the good iron that got wasted!

quote:

Originally posted by arocketman:
Chances are, if sounds too good to be true.......

quote:

Originally posted by Gila Hemi:
I heard that the actual cost to the government (tax payers) for each deal made is $24,000...

yes, per Edmonds .com
Taxpayers' real cost of cash for clunkers: $24000 a car, Edmonds

Not only do you get to pay sales tax on that new car you bought under the cash for clunkers program, you also get to pay income tax on the amount the government "gave" you for the clunker. File it under things that make you go !@#%&*?

quote:

Same type of scam with the 1st time home buyer's credit...you have to pay it back on your income taxes for the next 10 years!

quote:

Chances are, if sounds too good to be true.......

quote:

the government is always screwing us over some how

quote:

yes, per Edmond's .com
Taxpayers' real cost of cash for clunkers: $24000 a car, Edmond's

all fall under .........HI I am from the Government and I am here to help you.

As a guide line, if a liberal suggest it and thinks it's a good idea stay away from it.

quote:

Originally posted by Bamataco:
As a guide line, if a liberal suggest it and thinks it's a good idea stay away from it.

Heh heh heh! Liberals is so stoopud. (Think Yosemite Sam).

The only good to come out of C4C was all the Obama stickers taken off the road.