Clunkers

Cash for Clunkers took about 690,000 seasoned cars off our roads. Gone are those assets, those sources of parts and cheaper wheels for the less healed.

I have heard many voices reporting that the $4,500 will be taxed to the new car owners as ordinary income on their 2009 income taxes.

Much research does not bear that out; however, several states have tax codes that consider the event taxable. And, besides, most states with sales tax collected on the full cost before the government "gift" was deducted. A $20,500 car that earned a $4,500 deal would cost the consumer $16,000 out of pocket or on credit plus sales tax on $20,500.

Now if the US government, which is hungry for revenues, comes back and levies against the $4,500, the owners should be allowed to deduct from that number a reasonable value of their clunker such as Blue Book. Time will tell on that.

'til later