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McKeon wants tax deduction for auto buyers

Dealers face reduced workforce

Posted: February 6, 2009 1:08 a.m.
Updated: February 6, 2009 4:55 a.m.
 

Congressmen Howard "Buck" McKeon is hoping his proposed auto tax deduction legislation, which is currently in the Senate version of the economic stimulus package, will stimulate auto sales.

McKeon, R-Santa Clarita, while standing alongside a local business owner and an automobile dealership owner on Thursday said "California's economy is hurting, much like the rest of the country because consumer confidence and spending are at record lows."

McKeon further stated, "Our local businesses are reaching a breaking point. What we need is job creation and revitalization of the economy."

John Hoskinson, president and CEO of Gruber Systems, along with Don Fleming, president of Valencia Acura, joined McKeon to discuss the impact the economy is having on their businesses.
Hoskinson explained how his company has lost more than 140 full-time employees over the last two years, after operating in Santa Clarita for 31 years.

"I took a 35 percent pay cut a year ago," Hoskinson said. "Now it's down 50 percent."

Fleming added, "local auto dealers sales are down 40 to 45 percent from last year. Some dealers are down even more."

National car sales in January were reported to be at the lowest level of sales volume since 1981.

McKeon said changing public attitude will help change the economy.

"What we need is confidence and credit," he said. "Confidence and credit will get the economy flowing."
To that end, McKeon is leading the Republican charge promoting his Auto Ownership Tax Assistance bill that he hopes will stimulate and help customers buy cars and change attitudes.

This past week, the Senate voted 71-26 to add his bill to President Barack Obama's stimulus package.

McKeon joined other Republicans last week when he opposed H.R. 1, the American Recovery and Reinvestment Act of 2009 now being debated in the Senate. H.R. 1, passed in the House of Representatives by a vote of 244-188. In addition to all House Republicans, 11 Democrats voted against it.

McKeon's tax deduction bill, if passed as part of a stimulus bill, would give individuals up to $1,500 in tax relief by being able to write off loan interest on new car purchases.

This would be similar to what homeowners can do by taking a deduction for the interest paid on their mortgage.

"When they sell a car, the sales tax pays for roads and infrastructure," McKeon said Thursday. "If they don't sell that car, that money doesn't get to the city and it doesn't get invested in the community. In the stimulus package we need something that brings help, not long-range spending programs."
Car dealerships employ 1.1 million people nationwide, McKeon said, citing auto industry statistics.

This year, 700 dealerships have closed, which means the loss of 37,000 jobs nationally.

The auto bill would enable car buyers to save $1,320 on a $25,000 car, while generating sales tax for state and local governments to invest, according to McKeon.

It's targeted at car loans of up to $49,500 and is phased out for families making over $250,000.

Gruber makes machines and equipment for manufacturers that use "cast polymers" to make kitchen and bath products made of cultured marble and engineered stone.

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