Comments on: Fix the Tax Code Friday: Personal Interest Deduction

By: Matthew

Matthew — Wed, 18 Feb 2009 20:25:33 +0000

I was glad to read that this provision was removed. I planned on buying a car by the end of the year, but I was discouraged by this bill. I plan on paying cash, and I was insulted that somebody taking a loan could get such a better deal than me!

By: Economic Stimulus Plan Is (Almost) Law: What Made the Cut? | taxgirl

Economic Stimulus Plan Is (Almost) Law: What Made the Cut? | taxgirl — Mon, 16 Feb 2009 16:10:37 +0000

[...] No Car Loan Interest Deduction. Finally, some common sense. You know I wasn’t a fan of the $10 billion proposed break in personal interest for car loans. It was removed from the final [...]

By: Melody

Melody — Sun, 08 Feb 2009 01:01:35 +0000

Although Reagan is not my favorite president — Lord knows over the years while I was working I had enough stuff “trickling down” on me (and it wasn’t money)–, I do have to say that eliminating the personal interest deduction was probably a good idea. Rewarding people for using their credit cards just doesn’t make sense. We should be rewarding savings. So how about temporarily suspending taxes on interest, dividends, and capital gains? We could index it by income if we’re worried about giving another tax break to the rich, but, personally, I think saving at all income levels is worth rewarding.

By: pmac

pmac — Sat, 07 Feb 2009 15:40:03 +0000

If they want to encourage cars sales pay the sales tax for us.

By: JBruce

JBruce — Sat, 07 Feb 2009 15:30:53 +0000

Now that I have paid my non-mortgage debt down almost to zero, I say no — it won’t do me any good.
Seriously, I don’t think deducting non-mortgage interest will be much incentive to increase already “massive” credit card debt. It won’t be of any help to most families that now take the standard deduction. It probably won’t be much of an encouragement to buy a car, and won’t be much benefit to those who get low (or no) interest incentive financing. If the objective is to encourage car buying, how are we going to discriminate between those who would have bought a car anyway and those for whom the deduction of interest is the tipping point?
Made in USA is a good idea, but “qualifying” a car as made in USA would be a nightmare. Some Fords are made in Mexico; some Hondas are made in the US.
All in all, I think there are better ways to direct tax and spending stimuli toward job creation and stemmiung the tide of unemployment and housing market diusasters.

By: EllAnn

EllAnn — Sat, 07 Feb 2009 13:50:34 +0000

I agree with Robert D Flach, the government should not encourage excessive credit card, and other personal, debt by allowing the deduction of interest on such loans. As to the possible deduction of interest on a new car loan, maybe; if, it’s one of those deductions with an expiration date. It might help stimulate the purchase of vehicles. But have it expire in 5 or 6 years, and be for Made in the USA cars only. Vehicles produced by foreign countries but made in a US plant would qualify.

By: Skip McQuaid

Skip McQuaid — Sat, 07 Feb 2009 13:08:53 +0000

Want to boost the economy? Cut taxes. Whether that is with additional or larger credits, more deductions or whatever. The bigger the refund the more folks will spend. If the consumer is responsbile for 70% of our GNP then simply give the consumer more money to spend. “Build it and they will come”. Giving it to the banks hasn’t seemed to help much (and that is such a big surprise), bailing out various different companies hasn’t worked real well either (another big surprise). So how about putting the money where the power is – the consumer. Or, another road to help the economy would be to audit each and every politician – it appears they may have a problem understanding the laws they wrote…..

By: Robert D Flach

Robert D Flach — Sat, 07 Feb 2009 12:00:17 +0000

From the point of view of a tax preparer looking for deductions, I remember fondly the days when all interest – auto loan, credit card, pension loan, personal loan, student loan, etc – was fully deductible on Schedule A. The deduction was done away with under Reagan.

Some clients have long memories, especially when it comes to reducing taxes. I am occasionally asked by a client with a huge jump in income if we can use Income Averaging .

However I personally do not believe the government should encourage credit card debt, or other kinds of personal debt, by providing a deduction for such personal interest. It is more than enough that home equity interest for borrowings for personal use is deductible. I also do not believe a special “dispensation” should be allowed for a particular industry.

I do believe that auto loan interest should be allowed as an employee business expense for those who use their car for business – to make the deduction comparable to that of a self-employed taxpayer who deducts auto expenses on Schedule C.

TWTP