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Charities have been some of the loudest opponents of the Government CARS stimulus, voicing fears that it would cause car donations to plummet. “It varies by market, but there’s been an 11 to 12 percent drop compared with last year,” Volunteers of America VP (vehicle donations) Jim Hartman tells Reuters. “We started seeing it right away in July.” VOA and The Military Order of the Purple Heart each typically receive 40,000 to 50,000 vehicle donations a year. Purple Heart estimates its C4C losses at $105 million over 24 months. Hartman tells Reuters that a bill is pending in congress to increase vehicle donation tax credit caps to $2,500 from the current $500 limit.
13 Comments on “Cash for Clunker’s Charity Squeeze...”
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Remember when the government force AT&T to break up? Guess who was one of the loudest opponents? Widows and Orphans. Why? Because their pensions or annuities were invested in AT&T stock that paid regular fat dividends.
Seriously…. when the government started asking why phone calls were so expensive, that was the answer.
I personally don’t think there was a Widows/Orphans lobby group. I think it was something made up by AT&T to justify their continued monopoly.
If you really want to increase charitable donations of cars, return the rules to the way they used to be, i.e. book value. Of course, that deduction was primarily used by the middle class, and we can’t have that, can we. Chubby loopholes are for the rich only.
And it’s reduced the inventory of used cars. At least here in Denver.
http://www.9news.com/rss/article.aspx?storyid=121489
golden2husky, the rules were changed because fraud was epidemic with bogus high values claimed for donated cars. The deduction was “primarily used by the middle class” because those without a middle class income pay no income tax anyway. As for the rich, itemized deductions get phased out.
Does that mean that I’ll never see my higher-than-500 paperwork that the charity promised? Too bad I cannot FOIA them and see what they actually sold it for.
The charitable donation deduction on old cars has been much abused. I was nearly bought a used car from the original owner. Then I found out the owner had “donated” it to a charity, “bought” the car at auction for a tiny fraction of what the deduction was worth, then (with original title in hand still in his name) put the car on the market.
It was actually a decent car at a reasonable price, but I figured the seller was inherently dishonest so I passed on it.
It makes more sense for the government to legislate a solution that essentially makes it possible for these charities to act as “clunker” processors for folks who don’t want to get a new car from a dealer.
Cash For Clunkers is charity.
People used to be able to deduct blue book (private party or maybe even retail, the rules were unclear) value for donated cars (almost always a huge overestimate of the car’s actual value), but a couple years ago the tax rules were changed so that people could only deduct what the charity actually sold the car for.
What the charity actually sold the car for is going to be MUCH less than excellent condition blue book value. Charities get a very low amount of money for the cars that are donated to them, even considering the condition of the cars.
If anything is hurting vehicle donations it is that people are finally realizing that the rules for the deduction were changed, and the overall economy, not cash for clunkers. Now that the rules were changed almost every car is worth much more as a trade-in (even without cash for clunkers) than as a donation.
Even a $2,500 deduction (NOT credit) will only save a typical taxpayer maybe $500, not enough to compete with a $3,500 to $4,500 check.
Cash For Clunkers is charity.
Charity, maybe, for people who don’t need or really deserve it — people who A) are wealthy enough to buy a new car, and B) happen to own an older gas-guzzler. But for actual low-income people, it really sucks — the government is outbidding them for used cars and destroying them, thereby reducing the supply and jacking up the costs of affordable used cars. Can you imagine the screams if the government was bulldozing older affordable houses to stimulate the construction industry?
re: Slocum:
Can you imagine the screams if the government was bulldozing older affordable houses to stimulate the construction industry?
Actually it is:
“And what HUD is doing here is part of a national policy to destroy public housing and replace it with this euphemism of mixed-income housing, which is translated for the people who live there, means they take conventional public housing, destroy it and then allow about 10% of the people who used to live there to come back, but it is a great bonanza for developers, for real estate people, for banks, for construction groups and the like.
The public housing in New Orleans is actually some of the most structurally sound property that we have in this entire city [it was not flood damaged]. And the attack is not really on the buildings. It’s not really about the housing. It is an attack on the people who live in the buildings.”
I’m not saying new public housing should be built, but demolishing old, structurally sound public housing and creating more homeless people is just going to create more social problems and costs. But it helps developers. There are issues when public housing ends up being in prime real estate areas, but that is not the case in New Orleans, the torn down housing will probably end up being vacant land.
http://www.democracynow.org/2006/6/20/thousands_of_new_orleans_public_housing
+1 no_slushbox
The old tax rules were a scam. People wrote off the most optimistic possible retail value of their donated vehicles while the actual charity often received but a small fraction of that value when they resold the vehicle. It was like getting to take a $1 tax deduction for only donating a quarter.
I’m glad that rule was finally fixed.
I vaguely recall FDR doing something similar with a pig slaughter in order to reduce the surplus.
And to think that people thought Obama was a socialist.
I took advantage of the car donation to get rid of my crappy pickup and keep some of my hard earned money at the same time.
The car deduction was one of the last great middle class tax write offs. We can’t do interest on personal loans, cars or anything but mortgages anymore, can’t write off medical unless it’s more than 7.5% of income, can’t deduct expenses related to work like companies can.
Sure there was fraud in the system. Does anyone think there isn’t fraud in government? So what if someone tanks the beater car and gets around 15%(in real dollars) of what he claimed for it back in taxes. Big shit. Most people only did it once and that’s it. Realistically most of the time the dollars back on the refund were in line with what it was worth on ebay anyway. No one made a living at it.
But heaven forbid the working people get a free lunch once in a while. They might spend their huge windfall on something useless like food.