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Senate Approves New-Car Tax Break in 71-26 Vote

February 04, 2009

WASHINGTON (AP) — The Senate voted Tuesday to give a tax break to new-car buyers, setting aside bipartisan concerns over the size of an economic stimulus bill with a price tag edging above $900 billion.

The 71-26 vote came as President Barack Obama said he lies awake nights worrying about the economy, and signaled opposition to congressional attempts to insert "Buy American" provisions into the legislation.

Sen. Barbara Mikulski, D-Md., led the successful effort to allow many car buyers to claim an income tax deduction for sales taxes paid on new autos and interest payments on car loans.

She said the plan would aid the beleaguered automobile industry as well as create jobs at a time the economy is losing them at a rapid rate. "I believe we can help by getting the consumer into the showroom," she said.

The provision was attached to the economic stimulus bill at the heart of Obama's economic recovery plan and is subject to change or even elimination as the measure makes its way toward final passage.

Democratic leaders have pledged to have the bill ready for his signature by midmonth.

The White House released state-by-state job figures on Tuesday as a way to increase pressure on wavering lawmakers. It said the plan would create or save 116,000 jobs in Michigan over the two years of the proposed stimulus bill.

Mikulski's office put the cost of the tax break she sponsored at $11 billion over 10 years. It would apply to the first $49,500 in the price of a new car purchased between last Nov. 12 and Dec. 31, 2009. Individuals with incomes of up to $125,000 and couples earning as much as $250,000 could qualify, including those who do not itemize their deductions.

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