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Senator Mikulski wants to pimp your ride

November 19, 2008

A Maryland Senator says that if carmakers can't afford to offer a rebate, Congress should step in. Barbara Mikulski has proposed an above-the-line tax deduction on car loans and sales taxes for new cars bought from November 12, 2008 through the end of next year.

TaxVox is deeply unimpressed:

Anyone making up to $250,000 could take a deduction for sales taxes and the interest on loans of up to $49,500 on a car they buy through 2009.

There is so much wrong with this idea. At a time when people making minimum wage are losing jobs and houses, we are going to subsidize the purchase of $50,000+ cars by people making a quarter of a million dollars a year? I understand that Obama has deemed these folks the new middle class, but are they really the most needy in today's slumping economy? And why do we want to encourage people already saddled by underwater mortgage and credit card debt with even more borrowing? If, that is, they could even get the loans.

Maybe we need a new federal lending agency to subsidize these loans. Chevy Mae, anyone?

Flickr image by Hillman54

More good stuff on the auto bailout proposals:

Megan McCardle
Greg Mankiw

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I keep wondering where that magic number, "$250,000" comes from. It seems to have become the great dividing line between the middle and the upper incomes.

Nearly as I can tell, we're about to give the auto makers $25 billion (on a combined market cap of about $10 billion (today's stock prices)).

The interest, obviously, goes to finance companies. Why not just have the auto makers who run their own finance companies, just offer interest-free loans?

They do already? How was she supposed to know?

More than that, they could follow many of the furniture stores and offer "No Payments Until 2010!!!".

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