Tuesday, November 18, 2008

Why Does Detroit Make Big Gas Guzzlers And Who Should We Hang?


Midway through Bush's first term, the attempts to encourage U.S. car manufacturers to invest in fuel efficient vehicles were beaten back by Tom Delay and the Republican Party through manipulation of the tax code. The GOP made it far more attractive to buy a big gas guzzling SUV than a small car by offering enormous tax loopholes for Escalades, Hummers, Lincoln Navigators, Suburbans and other mammoth monstrosities. They defiantly pushed Detroit into making more clunkers. Except for a small handful of reactionary Democrats from the Republican wing of the Democratic Party-- like Jane Harman, Steve Israel, Bud Cramer, Lipinski... this kind of human refuse-- all the Democrats in the House voted no and all the Republicans but one moderate (Connie Morella from Maryland) voted yes.

So today we hear Republicans like Jon Kyl braying about how we should let the car companies go bankrupt because they were so stupid and incompetent for making the wrong product choices. What about Republican congressmen who mandated those decisions with their votes-- then representatives/now senators like Jim DeMint (R-SC), Saxby Chambliss (R-GA), David "Diapers" Vitter (R-LA), Johnny Isakson (R-GA), Lindsey Graham (R-SC), and John Sununu (R-NH); and then backbenchers/now GOP leaders like John Boehner (R-0H), Eric Cantor (R-VA), David Dreier (R-CA), Adam Putnam (R-FL), Roy Blunt (R-MO), and Mike Pence (R-IN)? Today they're not braying about their past votes, only working diligently to further cripple the American labor movement and continue the economic enslavement of the working and middle class.

Let me quote a bit from wikipedia's description of Section 179 of the relevant IRS Code, which allows for deductions for certain types of property on their income taxes.
Up to $25,000 of the cost of vehicles rated at not less than 14,000 lb gross vehicle rate can be deducted using a section 179 deduction. This deduction was enacted decades ago to assist self-employed people in purchasing a vehicle for business use. The weight minimum was intended to limit it to commercial-type trucks. For many years, the deduction remained below the average cost of a new vehicle, since large trucks were relatively inexpensive. Since it is a reduction in taxable income, the actual value of this deduction averages 30% of the price of the vehicle in question.

The increasing popularity of large vehicles such as sport utility vehicles in the last decade, however, pushed their average price to nearly double the average passenger car cost. In response, the 2002 Tax Act increased this deduction to $75,000, and it rose again to $100,000 for the 2003 tax year. This was more than three times the current average cost of a passenger car in the United States, and covered a large number of luxury models.

Critics felt that this deduction unfairly benefit buyers of heavy, and thus fuel-inefficient, vehicles. Indeed, the actual value of this deduction is far larger than the exemptions offered for alternative fuel vehicle purchasers. Further, some have suggested creating a small business simply to exploit this "loophole". Proponents contend that it benefits both small business owners and the United States automobile industry. Congress has since lowered the allowable deduction: as of October 22, 2004, only $25,000 may be deducted using section 179. In contrast, the maximum first year deduction for a passenger automobile is $10,610. Any excess cost may be deducted in future years.

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At 8:13 AM, Anonymous Anonymous said...

To those who oppose to Auto Industry Bail out;

In a perfect world of Capitalism only the strong survive and business takes care of
itself. But those are not the ground rules we have been playing under. The government
has controlled and mismanaged the credit markets with the introduction of the
Community Reinvestment Act and followed it up with deregulating and miss managing
Fannie Mae and Freddie Mac to the point that our credit system almost collapsed.
Add to that the deregulation of the futures market that allowed oil to hit $147.00 per
barrel and started a consumer driver recession. It is the governments fault,
they caused the problem and they should stand good to fix it. Gm has been in a restructure program for the last several years that should reach a majority of it’s
goals by 2010. I’m talking about moving the legacy cost of the retirees to the UAW,
which with other cuts and changes would drastically improve Gm’s underlying cost
per vehicle. Some say that GM built gas guzzler SUV’s and trucks that the public
didn’t want, but that was untrue, an out right lie. They were built due to demand
for such vehicles, look at your local Toyota lot and see the number of full size V-8
trucks and SUV’s. Toyota saw the demand and was trying to tap into that large market.
It was $4.00 a gallon gas that killed it in less than a month and no company can change
production over in less than 6 months and retool especially with the availability of loans
gone. Another government screw up. We pay more to other countries in the form of
aid to help with our security. Those opposed to helping out our manufacturing base
survive the screw ups of the government should ask themselves who will build the tanks
and planes the next time we need them. It makes me sick to my stomach to see supposedly grown men and women play these political games and argue over the fate
of millions of workers future when they caused the problem to begin with. It’s time
for our elected officials to get off their he said she said politically driven backsides, accept the responsibility that they know is their’s and fix this short term problem. For
the rest of you generating an income off of the volatile market ups and downs and enjoy
profiting from a company crashing, get a real job and contribute to society and quit being
the vultures you have become.

Mitch Mayberry

At 4:41 PM, Anonymous Anonymous said...

To "anonymous/mitch"

You think Fannie and Freddie were de-regulated?


Sure, they had to answer to some fatcats in D.C... but file with the SEC?


Republicans tried making them do that.

Democrats stopped them.

Then Mae and Mac said "oh, we'll do it voluntarily."

Yeah right. They didn't comply.

GM/Ford/Chrysler need Chapter 11.

Government handouts will only delay the day of reckoning.


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