Warren Mayor Has the Answer to Detroit's Problems
The mayor of Warren, MI has the answer to The Big 2.8's woes. The MacComb Daily reports that in a letter to the Michigan Congressional delegation, Mayor James Fouts called for the reinstatement of the federal income tax deduction for interest on auto loans. "More new vehicle sales means more jobs, less unemployment and lower government costs to assist the unemployed," Hizzoner reasoned. Representative Candice Miller thinks "the mayor's idea is very creative." What neither of them seem to realize is that all of the Detroit manufacturers have offered 0% interest rates– and these promotions haven't exactly set sales records. Deducting the interest wouldn't have any effect on payments, and that's what floats buyers' boats. Also, Mayor Fouts better be careful what he asks for. The resulting legislation would be industry-wide. It would likely hurt the American manufacturers more than it would help them.
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I pay 2.9% on my Honda loan, so this would save me round about... ...$300. Over the course of the 5-year loan. Score!
I don't like it, folks! It is not the government's position to determine "what" type of purchase is deserving of a tax deduction. That's like giving a gift certificate/gift card in lieu of cash at Christmas time. A nice thought, but what if the recipient doesn't like Target or Chili's? You've just limited their choice. If you really love them and you can't think of a gift, then just give them the cash! Likewise, I wish we could just lower ALL taxes and let the people decide what they want to do with their money!
You have to have great credit to qualify for 0% at any of the dealerships. The tax break would benefit those who do have to pay an interest rate and may be an insentive to purchase a car for some.