Trump to propose new tax break on car loan interest

This is hot off the wire, so the details are not in the CNBC article yet. I suppose the first question I'd have is would the car loan interest deduction be in addition to the standard deduction or pointless for those who would be better off taking the standard deduction regardless. Waiting for the details....

Trump to propose new tax break on car loan interest

 

Donald Trump on Thursday will support making interest on car loans fully tax deductible, the latest in a suite of tax-cut promises the Republican presidential nominee has made in the weeks before Election Day. Trump, in a speech to the Detroit Economic Club, will compare the plan to an existing tax deduction on mortgage interest, according to excerpts provided beforehand by the Trump campaign. The plan “will stimulate massive domestic auto production, and make car ownership dramatically more affordable for millions of working American families,” Trump will say.

The former president will also promise to bar Chinese-made autonomous vehicles from driving on American roads if he defeats Democratic nominee Kamala Harris in the Nov. 5 election.

Any plan to change the tax code would have to go through Congress, which holds the power of the purse under the U.S. Constitution.

Trump to propose new tax break on car loan interest

 

I see what he's going for. Brilliant. Now if he can come up with a plan that would increase home building, that would be even better. The reason Kamala's plan is stupid is because ability to repay the mortgage is the issue and hindrance for 99% of people who can't buy a home. Most state and local governments already have down-payment assistance programs readily available. You need to incentivize home builders to build more homes to keep the prices in check.

Back to the car loan interest deduction: still a great idea and of course, he's putting the finishing touches on Michigan with this proposal...

 

If Kamala's plan is for the government to build 3 million new homes, then I'm sorry your mother dropped you that many times as a baby and you actually believe that will happen. Considering that there are already roughly 1.5 million homes being built each year without her plan, she will likely sign that legislation and claim she did it in just two years. But if you believe the government is going to build 3,000,000 new homes on top of that total themselves, you're taking some potent stuff and I would strongly consider laying off of it. If you believe she means she's going to get private builders to build 3,000,000 new homes on top of the 1,500,000 they were already going to build, she hasn't even proposed that she has "concepts of a plan" to make that happen. Note that she never specifies who is going to actually build the 3,000,000 new homes, which is kinda important when talking in terms of "concepts of a plan."

 

Prior to this proposal, you could say that about most tax deductions. But if you take a family with a teenager or two, you have 3 or 4 cars in your home. Add the SALT deduction, medical expenses deduction, mortgage interest deduction, tuition, plus more... it would put a lot of families over the standard deduction.

Interest on two cars loans can easily be upwards of $6,000+ per year, if not more. If there are three car loans in the home, you might be looking at $10,000+ per year in auto loan interest. It would be a significant deduction. Even if only 5% of taxpayers benefit from it. That's well over 10,000,000 people.

 

How does expanding the LIHTC or a tax credit to first-time homebuyers build 3,000,000 new houses? Might it increase demand a little? Sure, but demand is already elevated. Demand is not the problem. There's a known shortage in housing. Supply is the problem. If government spends more money to increase demand, that'll simply elevate home prices even more, making them even less affordable. The affordability issue has almost nothing to do with a down payment or lack of a tax incentive for first-time buyers. It's the ability to repay the note. And do you really think home builders are going to put blind faith in people who otherwise would not have been able to buy a home without a government subsidy and build 3,000,000 more homes than they were already planning to?

You're putting your faith in someone who is as blind as a bat when it comes to economics. Her proposal of food cost controls (when food costs have actually stabilized) proves that. Who's going to build the 3,000,000 new homes?

 

I stand corrected. They are builder-side incentives, indeed. But can see the potential pitfalls a mile away. For one, define "starter home". But more importantly, how many cities are going to sign up for more low income neighborhoods being built en masse? Is the federal government going to force certain jurisdictions to allow mass construction of low income homes? It still seems as though companies such as yours would be risking diverting their resources to low income home building, with no doubt thinner profit margins even after the tax incentive. I'm sure there will be some caps in place.. there would almost have to be or else what's the guarantee low income is going to be able to afford the payment? Would need to see the details to give final comment on its viability. But on its face it sounds like it will have a million bureaucratic strings attached. That is just the nature of low-income housing. Not to knock it.. I'm all for people having a home.