The CANDU MEMO for an alternative Auto Industry Finance Crisis Solution :
THE SHORT-TERM IMMEDIATE SOLUTION:
I have called in a suggestion to members of the Senate Finance Committee for an alternative Auto Industry Finance Proposal.
1. Have the Fed create and fund the FVA (Federal Vehicle Authority -modeled after the FHA).
2. Instead of loaning the auto industry the $34 billion, why not have the FVA order -purchase 3 million (1 million from each of the big 3) of US Made (Jobs In US) of economically priced green cars (hybrids and electric) and resell them or lease them thru auto dealers with Sales Tax Free - low interest government guaranteed tax free auto loans and business credit lines - floor plan dealer financing guaranteed by the Fed's FVA. THE FVA WOULD HAVE TITLE TO THESE VEHICLES until sold or leased - Collateral for the financing.
3. If the dealers can not sell of the green cars fast enough, the FVA could sell or lease them direct to Federal, State and local government agencies - sales tax free and with low interest tax free auto loans or leases.
4. There would also be a 100% reduction and rebate of all Payroll taxes for the month of December 2008 and a 50% cut in payroll taxes employer expense for 3 months for production workers (not Administrative and CEO EXECUTIVES WITH PRIVATE COMPANY PLANES-now driving green to meet Congress) employed working to produce these cars. If the production UAW workers agree to a substantial contribution to lower the costs of these vehicles purchased by FVA, then they too would received the same rebate and reduction for the same period of Payroll taxes withheld (Social Security and Medicare).
5. If we really want to conserve the cash, we could offer banks that would finance this a tax free status on the income earned on the business loans to the auto industry which would be guaranteed by the Fed's FVA .
LONG-Term Auto Financial Crisis Solution
1. The American - US Auto Consumer Investment Tax Credit Program
Historically, we should look back to 1968 and we would see the dramatic effect on auto sales and the auto industry when there was relief from the federal excise tax that had previously been placed on automobiles sold.
Specifically the American - US Auto Consumer Investment Tax Credit is a 10% Federal Cash Tax Credit ($2,000 maximum) that a consumer receives for purchasing a "domestic qualifying"
US Manufactured or A US Assembled Foreign manufactured hybrid or electric automobile (all labor for these vehicles must be US workers for the vehicles to qualify and at least 50% of the material to produce the vehicle must be certified as "MADE IN THE USA')costing the Consumer at the retail price level (with all extras and with a 5 year manufacturer's warranty) $20,000 or less. The Cash Tax Credit for the consumer buyer is exempt from AMT, and can be carried forward if not used up in the year of purchase.
I have called in a suggestion to members of the Senate Finance Committee for an alternative Auto Industry Finance Proposal.
1. Have the Fed create and fund the FVA (Federal Vehicle Authority -modeled after the FHA).
2. Instead of loaning the auto industry the $34 billion, why not have the FVA order -purchase 3 million (1 million from each of the big 3) of US Made (Jobs In US) of economically priced green cars (hybrids and electric) and resell them or lease them thru auto dealers with Sales Tax Free - low interest government guaranteed tax free auto loans and business credit lines - floor plan dealer financing guaranteed by the Fed's FVA. THE FVA WOULD HAVE TITLE TO THESE VEHICLES until sold or leased - Collateral for the financing.
3. If the dealers can not sell of the green cars fast enough, the FVA could sell or lease them direct to Federal, State and local government agencies - sales tax free and with low interest tax free auto loans or leases.
4. There would also be a 100% reduction and rebate of all Payroll taxes for the month of December 2008 and a 50% cut in payroll taxes employer expense for 3 months for production workers (not Administrative and CEO EXECUTIVES WITH PRIVATE COMPANY PLANES-now driving green to meet Congress) employed working to produce these cars. If the production UAW workers agree to a substantial contribution to lower the costs of these vehicles purchased by FVA, then they too would received the same rebate and reduction for the same period of Payroll taxes withheld (Social Security and Medicare).
5. If we really want to conserve the cash, we could offer banks that would finance this a tax free status on the income earned on the business loans to the auto industry which would be guaranteed by the Fed's FVA .
LONG-Term Auto Financial Crisis Solution
1. The American - US Auto Consumer Investment Tax Credit Program
Historically, we should look back to 1968 and we would see the dramatic effect on auto sales and the auto industry when there was relief from the federal excise tax that had previously been placed on automobiles sold.
Specifically the American - US Auto Consumer Investment Tax Credit is a 10% Federal Cash Tax Credit ($2,000 maximum) that a consumer receives for purchasing a "domestic qualifying"
US Manufactured or A US Assembled Foreign manufactured hybrid or electric automobile (all labor for these vehicles must be US workers for the vehicles to qualify and at least 50% of the material to produce the vehicle must be certified as "MADE IN THE USA')costing the Consumer at the retail price level (with all extras and with a 5 year manufacturer's warranty) $20,000 or less. The Cash Tax Credit for the consumer buyer is exempt from AMT, and can be carried forward if not used up in the year of purchase.
2. The US auto companies that manufacture or assemble the qualifying vehicles will receive TWO TAX CREDITS:
- A 5% (of the Retail Sales Price of the qualifying vehicles as defined above) Federal Cash Tax Credit ($1,000 maximum per qualifying vehicle) that can be applied to the payment of federal payroll taxes (the expense portion limited to direct labor used in the manufacturing, and/or assembly of the qualifying vehicles) per vehicle produced AND SOLD at retail.
A 5% MADE IN THE USA DOMESTICALLY PRODUCED MATERIAL TAX CREDIT. The credit would be computed on 5% for the cost of all domestically produced steel and other raw materials and products (MADE IN THE USA) purchased AND USED IN A QUALIFYING VEHICLE. The maximum credit could not exceed a $1000 per qualifying vehicle and would be a refundable income tax credit for the auto manufacturers.
The qualifying vehicles would be required to have to have certain normal features of a comparable sedan or SUV that is not a hybrid or electric vehicle.
The auto dealers that sell these vehicles would also be eligible for a 2.5%% (of the Retail Sales Price as defined above) Federal Cash Tax Credit ($500 maximum per qualifying vehicle) applicable towards the payment of federal payroll taxes (the expense portion limited to the expense portion of non-owner sales and service personnel).
The Banks or Auto Finance Companies that provide financing for these qualifying vehicles at interest rates sold not to exceed for the consumer 4% per Annum over a maximum loan period of 5 years will receive a tax exempt status (and from AMT) for the interest earned on this auto financing. The Banks and Auto Finance Companies will be able to offer Tax Exempt bonds to generate the funds for the financing. They will also be able to purchase government insurance from the Federal Reserve's FVA (similar to FHA and FDIC insurance on loans) on qualifying auto loans.
The states where these qualifying vehicles are sold will be asked to participate in the program by reducing the sales tax rate on the qualifying vehicles sold to a maximum of 2% of the retail sales price ($400 maximum per qualifying vehicle).
Now at first appearances this might appear as a tax give a-way program. However, in reality, by providing all of the above tax incentives (formulated using the Theory of Tax-Enomics) to the American US Consumer and the Auto Industry and related sales and financing parts, it would be a tax revenue raiser , a boon to the US Economy, a positive increase for the US Balance of Trade in the auto industry, a positive impact on Energy Conservation and the Environment as described by the following benefits:
New Jobs and a significant rise in employment would be created in the auto industry WITHIN THE US , which would now expand consumer consumption by these new employees - a real economic expansion. When workers who were laid off in this industry or others seeking employment, are hired, they will be earning money that will be spent in local economies. This will generate other jobs (supply side economics), which will generate other consumer consumption. There will be an increase in tax revenue without raising tax rates, because the local gross national product domestically will be increased from an increase in taxable revenue generated locally by the above. Another bonus will be is that there will be favorable increase in our balance of trade for the US Auto industry.
The impact on the environment from the increase in the use of these autos, that are not gasoline driven, will be substantial. In the operation of their new autos the savings will be substantial to the consumer purchasers of these NON Gasoline driven Autos in their not being subject to price gauging of foreign oil producers (This will definitely put me on the DO NOT CALL list for Venezuela, Saudi Arabia and Iran).
Even the States that lower the sales tax for these vehicles, will generate new tax revenue, because they will be the states where these vehicles will be sold, and the savings to the purchasers and the auto dealers, will be spent, with new jobs created and new taxable revenue generated by an increase in consumer consumption of taxable sales other than the qualifying autos. Additionally, the increased quantity of qualifying vehicles sold, even at the reduced sales tax rates, will probably offset the reduction of taxable revenue from the lower sales tax rate on these qualifying vehicles.
Therefore by providing specificly targeted domestic tax incentives under the Theory of Tax-Enomics, the Federal and the State Governments will have an increase in tax revenue with reduced taxation per taxpayer. The taxpayer had more disposable income for domestic consumption.
In conjunction therewith, these domestic tax incentives will produce a favorable increase in domestic employment ( an increase in domestic jobs) in the auto industry and its related parts, with a corresponding favorable effect on the balance of trade in the US auto industry and the oil industry (less foreign made gasoline purchases). This will help level the playing field for the US Auto Manufacturers, that have had to compete with foreign companies subsidized by their governments, or using cheap labor to compete with.
Additionally, there will be a positive effect on energy conservation and the environment.
THUS MORE POWER FOR THE TAXPAYER'S BUCK SPENT WISELY.
- NOTE: I have found a product that has increased the gas milage on my cars by an average of 30%. I used to average on the road 20 MPG in my 2002 Chrysler Sebring Convertible(6 Cyl). When I used this product on the road my MPG average rose to 28.5 MPG. On my mpg gauge I saw it register at different times and speeds, as high as 40 MPG. A 3 year supply of this product with the sale of existing vehicles in production or on dealer lots would make the vehicles substantially green without engineering changes. The big 3 Auto manufacturer's should test it themselves in their vehicles. It increased the efficiency of the molecules of gas. The Product is called Ethos.
MRCANDU10 (Cousin of MR. Get-It Done)
