Senator Proposes Tax Incentives on New-Car Sales

U.S. Sen. Barbara Mikulski, D-Md., announced new legislation today intended to stimulate new-car sales. Her proposal would allow new-vehicle buyers to deduct the interest of their auto loans and any sales or excise fees on the sale from their income taxes. The plan would cover all new-car and truck sales from today through Dec. 31, 2009. 

According to the senator, a family would save $1,553 on a $25,000 car under the plan. The deduction would be limited to families earning less than $250,000 and individuals making less than $125,000.

While the idea would certainly be welcomed by most new-car buyers, it may not be enough to lure people into showrooms during a down economy. Of course, on top of other incentives we’ve been seeing lately, it could just add to one of the best buyer’s markets in recent history.

What do you think? Is this a good idea, or just more government handouts? Should the government focus on helping the industry directly?

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