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Sen. Mikulski Proposes Car Interest Deduction

3 min readBy: Gerald Prante

So the auto industry is in trouble, as it has been for about the last decade for a variety of reasons. So what's the solution? Loans, of course, from the taxpayers, and as always when a politician is seeking ways to subsidize an industry in a way that doesn't look like spending, handouts via the taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. code. Daily Tax Report reports that Sen. Barbara Mikulski (D-MD) is proposing two new tax breaks for the auto industry relating to the consumption side (so it won't look like a handout to auto makers and only to the consumer when in reality it all depends upon the economic incidence):

Above the line deduction for interest incurred for automobile purchases (similar to the mortgage interest deductionThe mortgage interest deduction is an itemized deduction for interest paid on home mortgages. It reduces households’ taxable incomes and, consequently, their total taxes paid. The Tax Cuts and Jobs Act (TCJA) reduced the amount of principal and limited the types of loans that qualify for the deduction. for housing)

Above the line deduction for state sales and excise taxes for new car purchases

Both policies would apply for cars purchased between Nov. 12, 2008 and Dec. 31, 2009

Mikulski's quote in the article is priceless:

"My bill is targeted at saving American jobs and helping families buy the cars they need to get to work and take their kids to school."

I guess I must be opposed to helping families get to work and kids get to school. Honestly, I don't know how they manage without this tax break.

But just so it's clear that I'm not opposed to saving American jobs, I say we go the other way, too: let's tax walking and bicycling and impose a huge tax on public transit in order to save Detroit. No more school buses or walking to school. No more trains or public buses. Cars only, and only one adult in a car. Carpooling is now banned. LOV enforcement will now take place. Also, let's lower the driving age to 12 and no more license tests. You say there would be more accidents? That's okay, because we'd have more jobs. We'd have to buy more ambulances, which would help the auto industry. Also, more wrecks mean more new cars would have to be purchased. Finally, used-car sales will be banned. This should be a no-brainer for the folks on the Hill.

I blame this all on Joe Biden. During his years in the Senate, Sen. Biden took the train every day from Delaware to Washington instead of driving. Think of how many hardworking jobs in Michigan that costs.

On a more serious note, of course, if Mikulski's bill was ever made into law, the tyranny of the status quo would kick in and we would likely never let it expire, just like the recent real estate taxes above-the-line deduction. Also, I'm surprised that Mikulski didn't have a provision inserted saying the bill only applies to American-made cars. Don't worry, I'm sure Debbie Stabenow will tack on that amendment when it comes up on the Senate floor.

I'm sure we'll get the usual response from conservatives who argue that any tax cut is a good tax cut, and that we should support this nonsense. My response to them is that I guess if Sen. Mikulski proposed an above-the-line deduction for contributions to ACORN, NOW, and the Mikulski for Senate Campaign, that would be good tax policy too? After all, those could be called "tax cuts."