(1888PressRelease)
May 21, 2009 - Car companies continue to lose large sums of money even after the bail out from Congress. The car companies efforts of closing plants, restructuring, and offering incentives is not working. Nothing will work unless or until the American people start buying new cars again. The stimulus bill that was just passed by Congress did little to change this alarming situation.
The passage of Bill HR 571 will help by repealing the limitations to vehicle donations to charities which were enacted by Congress in 2004. Those limitations have resulted in a 60% reduction in vehicle donations. Currently, taxpayers are only allowed to deduct $500 or what the charity sells the car for, whichever is greater. Under this bill, taxpayers would be allowed to deduct the Fair Market Value up to $2500 for their car donation, and the appraised value over $2500.
I can tell you based on my eleven plus years of experience operating vehicle donation centers that this bill will stimulate car sales. Why will it stimulate new car sales? The answer is simple; for the tax deduction. The vast majority of people donate their car because the car has a significant problem. Trying to sell a car with a significant problem is very difficult. Thats what makes the tax deduction received from donating a car so attractive. The better the tax deduction, the more likely the person is to donate their problem used car to charity and buy a new one.
Here are the advantages of passing this bill:
A significant increase in new car sales, which of course means less plant closings, fewer layoffs, more people working resulting in more taxes paid to the government instead of monies from the government in the form of unemployment checks, etc.
More revenue to charities at a time when their donations are greatly reduced due to the poor economy.
More revenue to local and state governments in the form of sales tax.
Donors receive a valuable tax deduction and feel good about contributing to a charity.
The disadvantages of passing this bill:
The federal government receives less money in income taxes as a result of the increased tax deduction by the donor.
Currently, this bill is stalled in the Committee on Ways and Means. HR 571 has too many advantages for our fragile economy to be stuck in committee. Congress needs to pass this bill immediately.
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