“Let me preface my comments.I do not like Obama or his marxist policies. However, some parts did work. Cash for clunkers did sell a lot of cars. Maybe not the way they intended but dealers cleaned up lots of inventory.”
A large part of the sales are just stolen demand. The auto cash for clunkers was mostly sales from future demand. I have heard talk in the real estate industry about a slump after the tax credit expires. The appliance rebate also seems sales stolen from future demand.
I am not sure if the tax credits are refundable. If they are refundable, you can lower your tax liability below 0 with a refund.
There is also some evidence that these types of tax credits also encourage customers with weak finances to spend recklessly.
The stimulus goes beyond vote buying with tax credits. The stimulus includes rebates beyond the tax credits. In Colorado, the stimulus money provided rebates beginning on April 19. These rebates are available to anyone regardeless of tax liability and residency. Even illegal aliens can receive these rebates. These rebates are in addition to rebates provided by the local utility and federal tax credits.
I am sure cash for clunkers did steal sales from future demand. So did the appliance rebate.
According to my CPA you actually have to pay taxes,above all other yearly deductions, to get the money back. I have checked into this specifically because I am considering enclosing a screened in porch. I would buy 9 windows and 2 doors. I would also insulate. There is a 30% tax credit on the insulation up to $1500(not the installation). There is also a tax credit of 30% on specific energy star windows/doors up to $1500. These are also the most expensive windows in various manufactures lines. They cost about $450/window for the size I need. The tax credit is only on the cost of the window/door , not the installation.
Therefore, I would have to owe $3000 in FICA at the end of 2010 above all other deductions to get the entire credit. For example, if at the end of the year I only owe the govt. $859 in taxes , the most I could get back is $859.
Therefore, this type of credit is best taken advantage by upper middle class people that do not own their own business and their income is reported on a standard W2.
FYI, my wife operates a small business and we have lots of legitimate deductions. I paid $83 in FICA taxes this year.
This is also the case for pellet stoves and certain wood stoves. I already have one wood stove. I am considering buying a pellet stove. My furnace burns #2 heating oil. It just keeps get more expensive. The price of pellets has actually gone down in the last year because pellet production is up. If you figure in the credit for the stove it could pay itself off in about 2-3 years. Plus I would not have to worry about prebuying my oil ever again. Also, the pellets come from sawmills in the US and Canada. I would be sopporting our economy not those OPEC B#st#rds.