[marne]

I want to make folks aware of an interesting development at the federal government level. It may provide you with some handy holiday savings. But it also raises a couple of questions I'd like your help in addressing.

Yesterday, U.S. Senators Patty Murray of WA and Olympia Snowe of ME introduced a bill to suspend sales tax for a 10-day period beginning the day after Thanksgiving. The purpose of this measure is to provide extra economic stimulus at the beginning of the key holiday buying season. Why do I bring up this proposal here (and not in the Off-Topic forum)? Because if this sales-tax-holiday measure passes (a BIG if), it would have a considerable impact on many folks like myself who expect to take delivery in the coming days of a new 2002 MDX.

To use a personal example, my 2002 Tour/Nav MDX will soon be delivered. I have a contract to buy it at MSRP ($39,300), plus $480 transportation charges and $270 in required options. That brings the car's price to $40,050.

In California, there is a state sales tax rate of 7%. Many counties and cities supplement this rate with local sales tax levies. Rates of 7.5% and 8% are not uncommon. (The top rate is 8.5% in the city of Avalon on Catalina Island off the Southern California coast. But I digress...)

The sales tax rate in Sonoma County is 7.25%. Therefore, I would save a bit over $2,900 if the Senators' plan is approved.

I'll be delighted to take that $3K and spend it on other car goodies -- to help the economy of course! (I'm pretty far into that amount already, given the pile of boxes I've received from Tim and Zaino! But I digress again...)

But I see a problem with this sales-tax-holiday plan. Who would buy a car in the three weeks before Thanksgiving if they could save a bundle by buying the same car in the 10 days after that holiday? Clearly, this issue will be faced by all car dealers in the 45 states which levy sales tax. How will dealers maintain current sales until the tax-holiday begins? Note that this is an issue now while the tax holiday is being debated, even if the proposal is ultimately defeated.)

Let me express this dilemma somewhat differently, and much more personally: What happens if the car I've been waiting for since July arrives as planned about November 10th and my dealer isn't willing to hold it for me for two weeks??? Do I pay the money -- including the tax -- I had always planned to pay and take the car? Do I bail on that long-awaited 'X and try to get one elsewhere? Do I try to get the dealer to post-date the sales paperwork to the 24th, perhaps by giving him a valid check for the full amount (less sales tax) ???

If possible, I'd like to hear the opinions of regular members and of dealer-members. Many thanks!!!

--Marne

 

[lester123]

Whereas you indicated a "federal thing", I recently saw something that Ohio will be suspending the state sales tax for a few days in Nov. BUT the purchase of auto's was not part of the "deal".

 

[vip9]

Sounds good, but...

Marne,

I am not familiar with the legislation you mention, but I have my doubts about the entire thing.

First of all, most if not all sales taxes are not Federal but rather state and local. So, for Feds to consider such an action, they would have to reimburse the states or coerce them into dropping sales tax. Of course, any governor/mayor refusing to "help" the US economy would face a backlash, so, in theory, it is "doable"

Second, although I wholeheartedly wish all of MDX-expecting folks all the best, I do not think you should keep your hopes high. Based on several tax-holiday examples in the past in NYC, they are usually limited and not-broadly-inclusive. Somehow, I do not see cars in general, and especially cars on the treashold of a luxury tax!!! to be included into this tax holiday.

Lastly, if the deal does go through and is indeed all-inclusive, there will be a haos in most markets right before and during such holiday. So, most likely, until the day-after-Thanksgiving, the deal will be kept secret, or rumored to be defeated. I doubt you'd be able to find MDX elsewhere - you cannot do it now!!! As far as a dealer "back-dating" a sale (if he has guts to do it), he would probably want somehting in return, like 50% of saved taxes.
Most are slimeball anyway.

Good luck and please keep us informed.

 

[remery]

How about this angle

Marne,
You could just pay a "parking fee" for space at the dealership until you return from your second or third pressing of the grapes! The parking fee should cover the time value of money for the dealer to hold the car say 20 days @6% annual for $40K comes to $131.50 or roughly $6.50 daily parking fee. Or better yet, give them a case of your better wine which might approach or exceed this amount!

 

[marne]

Good ideas!

lester123 and vip9: I too am not familiar with the details of the legislation. I heard a brief interview with Senator Murray on NPR (listen to it here) which did not specify the inclusion or exclusion of automobiles in the proposal. However, the proposal does indeed provide states with a reimbursement of the lost sales tax revenue from the federal government. The only states to be upset about the proposal are those without sales tax programs, since those states wouldn't get any of this federal pie.

remery: Your parking-space rent idea (and lester123's split-the-tax-savings idea) may have merit. But wine -- that's a truly great idea!!! Now, where could I get some??

--Marne

 

[RGWomack]

marne,
I heard that also and it is interesting. Because so many of the management and salespersons bonus' are based on numbers and profits that have to be closed out by the end of the month. I think that many managers would sell your MDX if you didnt come in and close out by the end of the month. I've seen it happen because folks were on vacation, and I don't like it. But as long as big bonus' are tied to profits they are going to go for the profits. If we get an advance warning or if it does come to pass I would go in and sit down with the GM and New Car manager and get some understanding of what you want to do, I just don't know what to tell you. Me personally I don't care if I get paid this month or next month and I would find a way for you to go on vacation or something. I would try figure out something.

 

[vip9]

Interesting Interview

Well, thanks to Marne for including a link. Interesting interview. They did emphasize the word EVERYTHING except tobacco and alchohol, and, being that is proposed by Democrats in the first place, if accepted, it may not have limits on higher-priced goods such as cars. Then, again, there are still doubts in my mind about this entire thing. The worst thing for me personally would be the fact that at this time I do not need to buy anything where a sales tax would be significantly important.

 

[davegood]

And the this that sucks for me

And the this that sucks for me is that Delaware has no sales tax, but the do charge a 2.75% 'registration fee' on autos.

I'm sure that this program wouldn't help me...

oh well -- hope it works out for the rest of you and the economy in general....

 

[mogur]

Since the federal government has absolutely no control over a states sales tax, I really don't know what kind of "law" they could pass to make this so. It sounds more like political posturing than anything else to me. I wouldn't hold my breath.

Tom

Yesterday, U.S. Senators Patty Murray of WA and Olympia Snow of ME introduced a bill to suspend sales tax for a 10-day period beginning the day after Thanksgiving.

 

[wmquan]

Why should the federal government, using tax dollars collected from all Americans in all states, reimburse states that ordinarily charge a sales tax to fund state budgets? Sounds like an ugly, inequitable way of redistributing dollars. Certainly not fair to residents of Florida, Delaware, etc. They would, in effect, be paying for my state's renovation of a state highway.

 

[davegood]

excellent pt

Very good point, william. The more equitable / less confusing thing to do is to mail more checks out, or provide vouchers for air travel / hotels in order to boost the struggling tourism industry.

 

[remery]

Why should the federal government, using tax dollars collected from all Americans in all states, reimburse states that ordinarily charge a sales tax to fund state budgets? Sounds like an ugly, inequitable way of redistributing dollars. Certainly not fair to residents of Florida, Delaware, etc. They would, in effect, be paying for my state's renovation of a state highway.

William,
Since when are politics equitable and if the democrats are behind this, do they really care how those republican dollars are redistributed?

 

[wmquan]

William,
Since when are politics equitable and if the democrats are behind this, do they really care how those republican dollars are redistributed?

Actually, I've seen one news report that says that some Democrats would object to this because it provides greater benefit to those who have the money to spend. For what it's worth, this proposal has been headed by a Democratic senator (Patty Murray of Washington) and a Republican senator (Olympia Snow of Maine) (okay, here come the cracks about Maine Republicans ...).

Yep, politics as implemented is usually inequitable.

 

[rspitz]

H.R. Bill

I found what must be the same bill on the house side (HR 3172) . If you want to read the specifics it is at:

http://rs9.loc.gov/cgi-bin/query/D?c107:1:./temp/~c107n8uY9A::

Dates that they mention are Nov 23rd thru Dec 2nd. I could not find anything on the senate side. Is anyone having better luck finding the specific Senate bill?

Current Status:

Latest Major Action: 10/25/2001 Referred to House committee
Title: To provide Federal reimbursement to the States for a limited tax holiday during the period beginning November 23, 2001, and ending December 2, 2001

 

[vip9]

It seems to be official...

Link to an MSN article (from Wash. Post)

No word on what would be included, nor even if it would really pass, but the general tone of the article, IMO, is supportive.

http://www.msnbc.com/news/651484.asp

 

[lester123]

I too have seen some articles about the proposals. Since my car is available in 2-3 weeks, it sure would be a nice early X-Mas present. Sounds too good to be true, but .....
However, can both the Senate and the House move on this so quickly - they will talk it to death first!!

 

[GatorGreg]

Sounds like an ugly, inequitable way of redistributing dollars. Certainly not fair to residents of Florida, Delaware, etc. They would, in effect, be paying for my state's renovation of a state highway.

I'm not sure I follow your logic with respect to Fla cuz Fla does in fact have a state sales tax unlike Delaware apparently. I'm guessing you were confusing personal state income tax (none in Fla ) with sales tax?

 

[davegood]

yep

Yep -- Delaware has no income tax whatsoever, but a higher than average income tax. Also, the 2.75% upfront (not annual) car registration fee.

 

[wmquan]

I'm not sure I follow your logic with respect to Fla cuz Fla does in fact have a state sales tax unlike Delaware apparently. I'm guessing you were confusing personal state income tax (none in Fla ) with sales tax?

Yep, my bad -- I confused no Florida income tax with the sales tax.

They say only a few states don't have sales tax nowadays (the article mentions Montana). Those would be the ones that, in theory, foot a disproportionate amount for federal reimbursement of lost state sales tax. Of course, the article mentions that companies in such states might benefit from higher sales of their products that are exported to other states. And there are always arguments about what's proportionate anyway (e.g. supposedly New York City gives the federal government greater revenue in various taxes than what it gets back).

Washington has a fairly high sales tax, partially to compensate for the lack of a state income tax. Though there are always threats of instituting a state income tax.

Washington used to have a pretty nasty annual vehicle registration tax, something on the order of several hundred a year for a vehicle like the MDX. An initiative killed it so it's less, but there are still some additional regional taxes that makes my annual registration bill for the MDX about $150.

 

[GatorGreg]

Re: yep

Yep -- Delaware has no income tax whatsoever, but a higher than average income tax.

Alright Dave, would you care to explain how Deleware can have a higher than average income tax if it has no income tax whatsoever? Sorry, I coldn't resist I THINK I know what you meant to say