Green Math, Part Deux

Math is hard and hippies are, well, hippies.

Greens like to do things that make them feel good about themselves, whether or not their actions actually do anything meaningful for Gaia, which is why they hate it when pesky facts shatter their planet-saving self image.

Remember Cash for Clunkers?  The basic idea was twofold; to take old, polluting cars off the road and replace them with new, shiny green-friendly machines, and secondly to inject life into a struggling auto-industry.  $3 billion later, now the event is over, it’s time to reflect on what sort of deal clunker-traders got:

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; it gets even better: you also got ripped off by the dealer. For example, in LA every dealer was selling a 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 let’s do the final tally here:

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

Your government at work, in the name of green.

Green Math Part Un is here, featuring the amazing 83-year depreciation of a 20-year asset at Nellis AFB.

4 thoughts on “Green Math, Part Deux”

  1. Hey there Daily B, like and appreciate this blog. Especially the Round-Ups. Keep up the good work!

    Meanwhile, back at the ranch, Cash 4 Clunkers joins the always lengthening list of Lib/Dem programs which hurt the poor the most.

    People who can afford a new car are rarely ever replacing a really ‘old’ clunker. People of modest means depend on the supply of ‘hand-me-down’ used cars to buy. Exactly the kind of cars that C4C destroyed and sent to the junkyard causing the price of operable used cars to jump.

    When I first heard about C4C it did indeed sound innovative and, quite likely, stimulative. But as soon as I saw the part requiring the destruction of the trade-in, I was just stunned! There is NO possible justification for the wanton destruction of valuable property. Approval of the C4C program was a criminal act. Suffice it to say, the rest of my thoughts on this matter aren’t fit for print.

    Mikey

    1. Thanks for the comments.
      Mike and Cars4Charities both note that the poor are left holding the mucky end of the stick once more, and thanks for linking to the cars for charities site, it looks like a great program.

  2. You are correct in your analysis of Cash for Clunkers. In the end, its only accomplishment was the destruction of almost 690,000 running vehicles. Because of that used car prices are way up and their sales are way down. In additon to hurting the used car business, c4c also hurt taxpayers, the poor, auto repair shops and car donations to charity.

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