by rdf
Wed Jun 18th, 2008 at 08:14:00 AM EST
The other day I floated an idea about having a spot for short items - something less than a full diary and more than a comment in a open thread. Here's my attempt at such an idea. [Actually this turned out a bit longer than I intended...]
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The market for gas guzzlers in the US has collapsed. On a radio show this morning one such owner (8 mpg) said that the original prices was $50K, he had paid $40K for a used one off lease a few years ago, and was now thinking of selling it. The "book" value or nominal resale historically for the vehicle was about $25K given the additional age, but that dealers would only offer him $8K.
My suggestion: a government program to have car makers accept such unsalable vehicles in exchange for a much higher mileage alternative with two incentives. The one for the seller would allow him to claim a "casualty" loss of the difference between the historical trade-in value and the new reality. Let's say in this case $17K (25-8). This loss could then be declared on the seller's income tax along with other traditional casualty losses.
The car maker would have to give a higher than current trade in allowance subject to two conditions: the gas guzzler would have to be scrapped and the replacement vehicle would have to be new and meet certain performance standards. In exchange the car maker would also get some sort of incentive from the government. This could be in the form of a tax credit or something similar.
The net effect: gas guzzlers get off the road quicker, new car sales get a boost and fuel consumption declines.