Car Loan Interest Tax Credit

Senate Approves Mikulski's Auto Amendment
WASHINGTON, D.C. – U.S. Senator Barbara A. Mikulski’s (D-Md.) amendment to the American Recovery and Reinvestment Act to save American jobs and help American consumers by giving tax relief to new car buyers was approved by the Senate today.

“Today the Senate voted ‘yes’ to getting our economy rolling again,” Senator Mikulski said. “President Obama said the goal for the economic recovery program is to create jobs and save jobs. That’s exactly what my amendment does. It’s targeted at saving American jobs and helping families buy the cars they need to get to work and take their kids to school. Our economy is teetering, and Congress must take swift action to save jobs and lend a helping hand to struggling families. That’s what we did here today.”

Senator Mikulski’s amendment, the Auto Assistance Ownership Amendment, makes interest payments on car loans and state sales or excise car tax-deductible for new cars purchased between November 12, 2008 and December 31, 2009, which, in turn, will help more Americans afford cars during these tough economic times and spur investment in America’s ailing automobile industry. For more information about Senator Mikulski’s amendment, go to: http://mikulski.senate.gov/_pdfs/Press/autoownershiptaxamendment.pdf

The American automobile industry is currently one of the biggest drivers of the U.S. economy. One out of every 10 jobs in America is auto-related. A collapse of a major U.S. automaker, such as GM, Ford or Chrysler, would further erode the American economy, given the huge network of suppliers, dealers, and other businesses and communities that would be affected. Already this year the U.S. auto industry has shed 110,000 jobs. In Maryland, approximately 500 jobs have been lost this year due to the closing of automobile dealerships.

Co-sponsors of the amendment include: Senator Sam Brownback (R-Kan.), Senator Debbie Stabenow (D-Mich.), Senator Kay Bailey Hutchison (R- TX.), Senator Jim Webb (D-Va.), Senator Sherrod Brown (D-Ohio), Senator Robert F. Bennett (R-Utah) and Senator Evan Bayh (D-Ind.).

The next step in the legislative process for the Mikulski Amendment is Senate approval of the American Recovery and Reinvestment Act. The bill then goes to conference, where differences in the House and Senate versions will be resolved before the legislation is sent to President Obama for his signature.

Senator Mikulski’s remarks, as prepared for delivery on the Senate floor, follow:

“Mr. President, our economy is in shambles. Our unemployment rate is at a 16-year high. More Americans are out of work today than at any other point in the last 25 years, and we lost more jobs in 2008 than in any year since 1945. People are losing their jobs, their life savings, and their homes.

“There is much work to do and no time to waste. We’ve already done a bailout. We’ve helped the sharks and we’ve helped the whales. Now it’s time to help the minnows.

“I have a proposal that will help. I am offering an amendment, co-sponsored by Senator Brownback, to save the American automobile industry, to help consumers to get our economy back on track, and to help state governments get more revenue. “It’s simple, it’s straightforward, it’s bipartisan. It’s also timely, targeted and temporary. And it saves jobs. Everyone wants to save auto manufacturers, but no matter how much government aid we give to the Big 3 auto makers, they can’t survive if consumers don’t start buying cars. That’s where my amendment helps. “I want to stimulate demand in the automobile industry so that people go to showrooms and buy cars. Why is this a good idea? If you buy a car, someone’s got to make them, someone’s got to sell them, someone has to service them and someone has to provide administrative services. So this amendment is good for the manufacturers, the dealers, the suppliers and the consumers. “My amendment is simple. If you buy a new passenger car, minivan, or light truck by December 31st of 2009, you will get a tax deduction for your sales or excise tax and the interest on your loan. A family would save about $1,500 on a $25,000 car, not counting the additional incentives from dealers.

“My amendment is not about bailouts. It’s about jobs, jobs, jobs. Six million jobs are at stake in the American car industry. One out of 10 jobs in America relates to the auto industry. Right now the facts are gloomy. If we lose the Big 3, then 3 million jobs are at risk. The only way to save the Big 3 is to get people into showrooms, but 1,000 dealerships could close this year. That’s 53,000 jobs that could be lost just at the dealerships. I believe we can help by getting the consumer into the showroom. They will know that the government is on their side and helping them with one of the biggest purchases they will make during this tough time.

“My amendment also helps state governments. States rely on tax revenue from new car sales. In my home state and many other states the sales tax is around 6 percent, so on a $25,000 car the state gets $1,500 in revenue. New car sales are down millions per year from their averages. This means states are losing billions when they already are struggling. My amendment will help because as people buy new cars states’ tax revenues will increase.

“This amendment is a big deal to families because a car is the second biggest purchase most families make. My amendment is targeted. Families with an income of more than $250,000 a year are ineligible. Cars costing more than $49,500 also are ineligible. This amendment also helps the environment because it gets more people into new cars and new cars are cleaner and more fuel efficient than old cars.

“There are 20,000 new car dealerships nationwide. They employ a million people. In my own home state, there are around 300 dealerships. Most people don’t realize that dealers employ an average of 53 people in sales, mechanics, and administrative positions. I visited car dealerships in Maryland and heard from these employees.

“I’ve talked to people like the mechanic who works for a Chevy dealer in Bethesda. He’s worked there for 23 years. He said to me, ‘Senator Barb, all my life I’ve loved to work on cars. I just love it. I love to fix them, I love to repair them. If they’re new, I want to make sure they’re fit for duty. I’ve earned a good living. I’ve been happy and I think I’ve helped make a lot of other people happy. But the only way I can stay happy is if I continue to work. I’ve got a mortgage. I’ve got two kids in college. Maybe they’re going to go into engineering, I don’t know, but if we don’t get more people into this dealership, my job could be gone.’

“And I talked to the dealer. The dealer’s name is Sam. The first thing you note about him is that he wears the little rotary pin because he’s the guy that not only provides jobs in the community, he is also part of the Chamber of Commerce and part of the United Way.

“We are talking about people who are part of the fabric of our society. We are not talking about an abstraction and we’re not talking about a single zip code, like Wall Street. We are talking about the automobile industry, which is in every state and every community.

“Maybe you know somebody who works for a hedge fund. I don’t. But I do know the people who work for the automobile industry, like the receptionist who went to work at a dealership 43 years ago right out of high school. And she said, ‘Senator Barb, women couldn’t sell cars in those days, but I’ve been here in and out of this same dealership for 43 years. I’ve raised my kids and earned a good living doing the back office work and I want to keep on doing it. I’m not ready for Social Security and for God’s sake don’t put the money in Wall Street.’

“Well, I say let’s put money where it matters — where it creates jobs. That’s why we need this amendment — for creating jobs, for consumers, and for the auto industry that is such a driver of our country’s economy — so we can get America rolling again.”