Worth the read....Whose math is this?

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Forum topic by Dan'um Style posted 10-02-2009 05:41 AM 1414 views 0 times favorited 21 replies Add to Favorites Watch
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Dan'um Style

14167 posts in 3400 days

10-02-2009 05:41 AM

Topic tags/keywords: humor

Got this in an email from a friend in Peoria … If you like this one,,,, send the link to your friends so they can read it for them selves !!!

Here is what you should know and understand about our government’s math.
Ignore all the gas crap and just look at how
the stupid car buyer got taken to the cleaners:

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, every dealer here 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 lets 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

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 lets 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 poor
stupid consumer got saddled with even more debt that they cannot afford.

Obama and his band of merry men convinced Joe consumer
that he was getting $4500 in “free” money from the “government” when in fact Joe was giving away his $3500 car and paying an additional $3350 for the privilege.

-- keeping myself entertained ... Humor and fun lubricate the brain

21 replies so far

View Napaman's profile


5508 posts in 3494 days

#1 posted 10-02-2009 05:49 AM

I kept my 1998 Honda…waaaay cheaper…your right…

-- Matt--Proud LJ since 2007

View Karson's profile


35032 posts in 3817 days

#2 posted 10-02-2009 05:56 AM

I’m still driving my old clunker. I could figure out the list price part of the scam, but didn’t figure out the taxes part.

-- I've been blessed with a father who liked to tinker in wood, and a wife who lets me tinker in wood. Southern Delaware soon moving to Virginia †

View jsheaney's profile


141 posts in 3405 days

#3 posted 10-02-2009 06:25 AM

Humorous, but not actually true. There is no federal income tax on the cash for clunkers credit.

From the official government web site:

Is the credit subject to being taxed as income to the consumers that participate in the program?
NO. The CARS Act expressly provides that the credit is not income for the consumer.

State income taxes depend on your state, but it certainly wouldn’t amount to 30%. Also, it should only apply to the amount the credit was over the actual value of the car. In your example, the state income tax would be on the $1000, if it was incurred at all. Definitely check out your own state, though.

-- Disappointment is an empty box full of expectation.

View Fuzzy's profile


297 posts in 3405 days

#4 posted 10-02-2009 06:36 AM

Something else to ponder .. .. ..

I guess I must be on the wrong page…

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.

How good a deal was that ???

They’ll probably do a great job with health care though!! Please don’t hold your breath or if you live in Nevada don’t Bet on it!

-- - dabbling in sarcasm is foolish … if you’re not proficient at it, you end up looking stupid … ... ...

View degoose's profile


7193 posts in 2771 days

#5 posted 10-02-2009 10:02 AM

My car is nearly as old as I am.. and I can’t get a deal like you guys did…bugger..

-- Drink twice... and don't bother to cut... @ For lovers of all things timber...

View cbMerlin's profile


100 posts in 2837 days

#6 posted 10-02-2009 01:09 PM

I usually come to this site to escape from politics, but I just can’t keep myself from jumping in here. (Sorry, but Dan hit a sore spot) With possible exception of the military, can anyone name me just ONE well-intentioned government program that has actually worked? Making promises with your fingers crossed behind your back is an old child’s “game”. “Power corrupts, absolute power corrupts absolutely”.

Take a tree, cut it down, saw it up, dry it out, cut it up again, sand it smooth, work like hell on a project, make something beautiful, sell it, make a profit, give the goverment 30%+ without them lifting a finger, re-elect the people who did it to you, HUH?

There our countless examples of “Fuzzy Math” in our history, here’s just one:

Franklin Roosevelt, a Democrat, introduced the Social Security (FICA) Program. He promised:

1.) That participation in the Program would be completely voluntary,

2.) That the participants would only have to pay 1% of the first $1,400 of their annual incomes into the Program,

3.) That the money the participants elected to put into the Program would be deductible from their income for tax purposes each year,

4.) That the money the participants put into the independent “Trust Fund” rather than into the General operating fund, and therefore, would only be used to fund the Social Security
Retirement Program, and no other Government program, and,

5.) That the annuity payments to the retirees would never be taxed as income.

Since many of us have paid into FICA for years and are now receiving a Social Security check every month—and then finding that we are getting taxed on 85% of the money we paid to the Federal government
to “put away”—you may be interested in the following:


Q: Which Political Party took Social Security from the Independent “Trust Fund” and put it into the
General fund so that Congress could spend it?

A: It was Lyndon Johnson and the democratically controlled House and Senate.


Q: Which Political Party eliminated the income tax deduction for Social Security (FICA) withholding?

A: The Democratic Party.


Q: Which Political Party started taxing Social Security annuities?

A: The Democratic Party, with Al Gore casting the “tie-breaking” deciding vote as President of the
Senate, while he was Vice President of the US.


Q: Which Political Party decided to start giving annuity payments to immigrants?


A: That’s right! Jimmy Carter and the Democratic Party. Immigrants moved into this country, and at age 65,
began to receive Social Security payments! The Democratic Party gave these payments to them,
even though they never paid a dime into it!


Then, after doing all this lying and thieving and violating of the original contract (FICA), the Democrats
turn around and tell you that the Republicans Want to take your Social Security away!

And the worst part about it is uninformed citizens believe it!

-- Sawdust looks better in the garage than cars, explain that to your wife!

View GMman's profile


3902 posts in 3114 days

#7 posted 10-02-2009 03:04 PM

Dan you are 100% right I have seen it here in Canada just the other day on a Chevy Pickup truck.
They advertise $3300 for clunkers but the one he had they said was only $3000.
Now the $1000 extra because he was driving a Chevy “loyalty they call it” he did not qualify on the clunker deal.
The 6’’ oval assist steps advertised if you buy a Chevy truck he did not qualify on the clunker deal.
He was offered $2000 cash before he traded and figured he was getting a better deal with GM??

I think he was taken by GM!

View ajosephg's profile


1878 posts in 2978 days

#8 posted 10-02-2009 03:29 PM

I too received the email Fuzzy presented, and did some additional research as follows:

A. One barrel of oil produces about 20 gallons of gas. So the savings
would be about 11 million barrels of oil (instead of 5).

B. The dollar savings therefore would be $784 million PER YEAR.

C. Since the savings are on-going it would pay back in about 3.8 years.

Don’t get me wrong – I think Cash For Clunkers was wrong headed, but those who feel that way should make sure we don’t look silly by presenting a flawed argument.

-- Joe

View PurpLev's profile


8523 posts in 3065 days

#9 posted 10-02-2009 03:42 PM

not quite true… the plan is not to try and “get people”, but to allow people that have crappy cars with low MPG to take advantage of an opportunity to exchange it at a better cost – this is mostly aimed at people that are looking to trade in their cars anyways – so they would have also paid taxes on the car if they payed $3000 – so comparing $4500-1350 to $3500 is incorrect math, the bottom line is (without correcting the tax) would be $4500-$1350 compared to $3000- 900, so the guy trading in his car would end up pocketing $3150 with the plan as opposed to $2100… now – that’s NOT a bad deal. and this is taking in the “worst scenario” – I had a friend that got $4500 for his $1500 worth of a clunker – you can’t really beat that.

NOW, for the list price- yes, I know that many dealers especially in LA had such a huge demand from clients that they ended up selling at list price. this has nothing to do with the planning of this program, but just a side effect of “sale” or increase in sales – not really a conspiracy. Still – some dealers, DID offer incentives and discounts, not many, but some did.

-- ㊍ When in doubt - There is no doubt - Go the safer route.

View Bob #2's profile

Bob #2

3809 posts in 3438 days

#10 posted 10-02-2009 04:39 PM

I we cannot determine what the exact cost of a vehicle is then it is pretty much impossible to determine the suggested retail.
That seems to be the fly in the ointment from where I sit.
I’m no stranger to manufacturing and I can tell you that very often it is the ”perceived” value that is the sticker price not the actual input costs plus a reasonable return on investment.

Back to buying a car, its the net difference between the trade and the newer car that determines whether the government aid is a benefit.

That appears to be skewed with the tax claw-back.


-- A mind, like a home, is furnished by its owner

View bhack's profile


349 posts in 3137 days

#11 posted 10-02-2009 04:58 PM

The consumer now has a loan payment, higher insurance premium, and higher registration cost. Probably did not need the extra financial burden. May be some pretty good deals on the used car market in a couple of years. We are going to continue to drive our cars and use gasoline. With a new car they will drive more and start to offset the difference in mpg difference.

-- Bill - If I knew GRANDKIDS were so much fun I would have had them first.

View Bob #2's profile

Bob #2

3809 posts in 3438 days

#12 posted 10-02-2009 05:03 PM

Bill, would if be safe to say that average consumers will have to decide how much “vehicle” they really need versus rising food costs and a slow economy?
We talk incessantly about oil when the cost of food is escalating much faster than expected.

-- A mind, like a home, is furnished by its owner

View bhack's profile


349 posts in 3137 days

#13 posted 10-02-2009 05:16 PM

The average consumer does not decide anything. They obey the politician and the tv ads. “ooh that looks cool I’ll charge it” attitude is their decision making process. The rising cost of food will be a concern when the politician tells them it is.

-- Bill - If I knew GRANDKIDS were so much fun I would have had them first.

View PurpLev's profile


8523 posts in 3065 days

#14 posted 10-02-2009 05:18 PM

with a new car they will drive more?

I fail to understand that logic, why would someone drive more with a new car than they would with their old car?

I think there were cars out there that were at their end of life- these were the candidates for the plan, and their owners would have soon be stuck with a broken car ,that has no value at all, and would still have to buy a new car and have the same finances going on.

I don’t think the clunkers program was meant for every average joe – but for some, it was a real bonus.

-- ㊍ When in doubt - There is no doubt - Go the safer route.

View HokieMojo's profile


2103 posts in 3145 days

#15 posted 10-02-2009 05:29 PM

you asked to name a single US gov’t program other than the military that has been successful. what about our park system or our highway system or our school system? None of these are perfect, but they are all what I’d consider relatively successful.

showing 1 through 15 of 21 replies

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