By on July 25, 2008

Come on now... do you really think it would make any difference?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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13 Comments on “Warren Mayor Has the Answer to Detroit’s Problems...”


  • avatar
    detroit1701

    Frank,

    Great point. It would help the Japanese Big 3 and Germans more, since they do not tend to offer the 0% financing. In a way, such a scheme would create incentives for banks and financing arms like GMAC actually to increase interest rates.

  • avatar
    Landcrusher

    I think it’s a great idea. I reckon if they start charging interest again, the cash price will go down. Also, as they continue to make the tax code even more complicated for those hardly paying any taxes, we increase the likelyhood that we can rid ourselves of the existing code altogether.

  • avatar
    mdf

    I’ve always assumed “0% financing” was a something of a scam: these are car dealerships we are talking about. I’d guess that the expected interest was, somehow, built into the principal of the loan.

  • avatar
    cleek

    I wonder if the proposed interest deduction will make up for increased Warren MI property tax rates?

  • avatar
    crackers

    Kudos to the mayor for suggesting a solution that reduces taxes rather than increases them. Most local politicians don’t understand the concept of “less is more”.

  • avatar
    jurisb

    If you have problems selling 15K Chevy Cobalts, but koreans can sell easily 50k loaded Genesae, I doubt if price range is exactly the problem. It might be, I am just guessing, the PRODUCT.

  • avatar

    @MDF

    Dealerships are not banks. They do not provide the auto loans, banks do. And in the case of 0% auto loans, that was provided by GMAC and Ford Credit, for those with good enough credit to quality.

    As far as tax-deductible auto loan interest goes, Mayor Fouts needs to be recalled…and then stoned. WTF was the city of Warren thinking…putting this dolt in office. Jackass.

  • avatar
    Qwerty

    Why don’t we make credit card interest deductable. It’s just what we need: A way to encourage Americans to live even further beyond their means.

  • avatar
    Pch101

    The problem at the moment is not the price of money (interest rates), but the availability of money (credit crunch) and the lack of stability (low consumer confidence, rising unemployment.)

    Our current economic woes are not going to be sorted out until credit is freely flowing again, workers are getting new jobs and raises, and consumers have enough confidence to spend money that will encourage employers to gear up for demand by providing more jobs and raises. Tax incentives are not going to help at times like these, it all begins with restoring the kind of market stability that encourages lenders to lend in the first place.

  • avatar
    Axel

    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!

  • avatar
    ZoomZoom

    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!

  • avatar
    bluecon

    ‘It is not the government’s position to determine “what” type of purchase is deserving of a tax deduction.”

    Follow the Constitution? Who would have thought of that, certainly not the politicians or the courts.

    We are not going to come out of this economic mess till the real estate bottoms and that aint gonna happen for a good long time.

  • avatar
    shiney222

    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.

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