The government seems to think the cash for clunkers was a huge success, because so many people took advantage of it. They gave people who traded in their older, non efficient cars (which they destroyed) and gave them $4,500 to get a new car with better gas mileage.
Now, in some cases, these cars were
perfectly good cars, they ran great, got less than perfect gas mileage,
but
they ran well.
These cars, instead of
being crushed, could have been used for parts for other cars of the
same model,
could have been given to women who had left abusive houses and helped
them get
jobs. There were just too many things that could have been done with
those cars
that would have helped our economy more than destroying them.
But, now for my stupid idea of the day!
If the government thinks that is such a great idea, why not “Cash for
Clunkers
– Home Edition”? Do you have an older home that you own outright and
can’t be
sold for more than $20,000 because of some meth dealer decided to use
it as a
lab? The home has become an eye sore on the community and because of
it, it
certainly is no longer or may have never been a green home.
Why not offer that owner $150,000 to burn down that house and to build a new one in its place? Think what this would do for the economy. (This the governments logic, not mine!) You have now taken away an eye sore that wouldn’t get hardly any tax revenue and increased the amount of property taxes that would come for that new home. The neighbors value would also go up that would increase the property value of those homes and making more taxes for the government.
So here is the math
$20,000 Meth House (tear it down and give the owner $150,000 to build a new home)
-$150,000 (Plus the amount the government is giving to burn down this house)
-$147,500 (-$2,500 the increase amount of tax revenue generated by new home in property taxes)
-$140,000
(-$7,500 this represents the taxes paid by the workers who earned money
to
build the house in gas taxes, sales taxes and income taxes)
$127,500 (This is minus the increase of $500 per 25 closest homes in
property
taxes because of their new increase value because of the eye sore being
gone)
$102,500
(Don’t forget the $25,000 in building permits paid to local government)
$60,500 (Of course you have to pay a 28% tax on the $150,000 given to
you as
income)
So after just one year on this home
the
government will get over $90,000 of their money back and over the next 4 years because
of the increase
property taxes in the area the government will get all their money back.
See? Even I can make fuzzy math work. We all know this wouldn’t happen in real life, but looking at the cash for clunkers car edition, this is the same math they used on those and did it save Saturn? Nope, it actually put a lot of money in the Japanese car makers pockets and why? Because they make a better product, plain and simple! Stop bailing everyone out, because this isn’t working, just let the economy run its course because you may actually be doing more harm that good!
Todd Clark and the Friendly Home Team
Knipe Realty
Todd@IFoundYourNewHome.com
Phone: (503)524-9494
Fax: (503)746-9573
I am a licensed Realtor who specializes in Washington County, Oregon and also work in both Clackamas and Multnomah Counties including the cities of Aloha, Beaverton, Canby, Clackamas, Gladstone, Gresham, Happy Valley, Hillsboro, Milwaukie, Oregon City, Sherwood and Tigard. All information contained in these posts are copyrighted and cannot be used without prior written approval authorization from the author me Todd Clark. If you are looking for an outstanding agent please give me a call I would love to help you with all your real estate needs.
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Todd, your whacky math makes as much sense as the government's wacky math does.
Please don't give the government any more ideas.
Try this math:
If you traded in a clunker worth $3500, you get $4500 off for an apparent "savings" 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: you also got ripped off by the dealer.
For example, every dealer 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 that Ford and Chevy did).
So here's the final tally:
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 let's 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
consumer got saddled with even more debt that they cannot afford.
The consumer was convinced that he was getting $4500 in "free" money from the "government" when in fact the consumer was giving away his $3500 car and paying an additional $3350 for the privilege.
A vehicle at 15 mpg and 12,000 miles per year uses 800 gallons a year of gasoline.
A vehicle at 25 mpg and 12,000 miles per year uses 480 gallons a year.
So, the average "Cash for Clunkers" transaction will reduce US gasoline consumption
by 320 gallons per year.
They claim 700,000 vehicles - so that's 224 million gallons/year.
That equates to a bit over 5 million barrels of oil.
5 million barrels of oil is about ¼ of one day's US consumption.
And, 5 million barrels of oil costs about $350 million dollars at $70/bbl.
So, we all contributed to spending $3 billion to save $350 million.
(I don't know if this is true or not; someone sent it to me. If it is true, it is pretty "funny.")
I got a kick out of this, because if you can't laugh all you can do is cry. Thanks for letting me reblog!
Hi Todd...you are up way to late.
Thanks for the bedtime humor, have a great day tomorrow, and go put up lots of Sold Signs on your listing:O)
Shirley -
It isn't true. But it sure is funny.
Todd -
I think you are right - they should have given the clunkers away instead. But if they had the environmental supporters of the idea would've likely gone away.
Todd,
There are allot of people who could have used those dependable, affordable gas hogs! Their are allot more that need affordable housing! This plan would make these house worth at least $150,000 + the value of the lot. That exceeds the national median value so even median buyers couldn't afford them.
Of course when Cap and Trade passes we'll be luckey if required improvements don't add $100,000 to the cost of selling a home.
Between them these proposals will will eliminate starter homes and have the added benefit of seeing that only the right people can control a home of their own. I wounder who will make the decisions about who is worthy of independent living?
I wounder why Communist supporters always think they will be among the chosen elite?
Bill
Todd - The best advice we can give to the government is in the last sentence of your post - "just let the economy run its course" There is no such thing as "free" money, even if they have a printing press at their disposal.
Todd - where the heck are you going to get a $150,000 home in Beaverton?
Marchel - Sad isn't it? You wonder if they are smoking something that is illegal over there in Washington.
Syreeta - They don't listen to my good ideas, I figure they wont listen to my crappy ones either. (LOL)
Shirley - Sad, but not true. Just seems like that math would work, but the money certainly didn't stay here in the states.
Janna - That is exactly how I'm starting to feel about this, but I'm afraid if we keep laughing, they may make that against the law also.
Fred - It wasn't even late when I posted this, It was only 8pm, that is way early for me!
Jim - The government doesn't think that way, instead the chemicals they put in the cars to make sure they weren't used again were far worse for the environment than actually driving the cars for the next 30 years. (Look forward to meeting you today, it will be fun)
Bill - That thing scares me to death and I think they are getting closer and closer to passing it and if they do, I see another peace prize for our president next year.
Judy - They think their is and the problem is it ours, our childrens and our great grandchildrens money, just not theirs.
Mike - They are starting to show up, but you don't want to see what they look like!
Todd, I see the method to your madness. Hopefully we don't have that many meth houses in this country but we need to be thinking of ways to stimulate our economy. I enjoyed your insight...
Supercharge your week, great things will happen!
Paul
Todd, indeed a funny post. I do agree that those clunkers could have helped other people in need instead of being destroyed.
Todd --- I agree with you -- those old cars could have been used for something "good" --also, I agree that the government should let the economy run its course.
Mama Liz
Hi Todd. The government should stay out of private business but your numbers make me laugh :-) ~ Lana