Back in the car business, you were only as good as your last sales month. “I don’t care that you sold twenty cars last month, what have you done lately?”
Since automobile sales people are typically motivated by both a percentage of gross profit and unit-driven pay plans, there’s a lot of temptation to ‘rob Peter to pay Paul’. If the sales person, finance manager, or sales manager can somehow extend a month (example, the month ends of a Friday, but you count sales on that next Saturday as being for the previous month) it could be possible to meet your bonus levels. Harmless little bit of creative accounting, right? Well, no.
The reality of the shell game is that by stealing the deal from the next month, you’ve actually created the need to replace it with TWO sales – the one you stole and the one you’ll need to replace it. This also make the dealership pay more for compensation-per-vehicle than it normally would, which of course was the entire point of the shell game anyway.
The Consumerist has some unsurprising news about where the pending (May) tax breaks ($300-600 per individual, $1200 per household, with $300 per child, for those with incomes of $75-150k, as well as some others) will come from and how they will be handled in subsequent tax years.
Knowing full well that TNSTAAFL (look it up, you know what it means), that money HAS to come from somewhere. G-Dub surely meant when he said he wanted to let the American people keep more of their money, even if its money from the future! From Consumerist Commentary:
First of all, there will be no effect to 2007 tax returns. The “rebate” that will be signed into law next week is actually an “advance” on a credit that will be presented on 2008 tax returns.
In April 2009 or thereabouts, when you file your taxes for 2008, they will run the calculation for the stimulus rebate again. If the results show that you would have received more (due to an additional child, for instance), you will be sent the difference (or owe less on your final tax bill). If your results show that you would have received a smaller rebate, then you get to keep the difference.
To summarize, the rebate that will be sent out in May 2008 is a credit to the taxes you’ll owe on 2008 income [emphasis theirs].
I haven’t seen much analysis as to how people spend their income tax rebates – in fact, there was only one study that I see commonly cited. What I do know from my own experiences is that people count on their rebates, and will be unlikely to appreciate that their 2009 refund will be reduced by the amount of this new ‘found governmental rebate’ money that is arriving as part of the financial stimulus. There are also scores of business that are dependent on the found money that comes from income tax refunds, such as car dealers, vacation sites and resorts, and home improvement contractors, all of home will be paying for the actions of the recent past NEXT YEAR with reduced demand.
It’s also convenient that the tail end of George W. Bush’s presidency will be bailed out by United States revenue from 2009 and the next President. Maybe that’s why insiders in his Administration think he’ll leave office with a 45% approval rate?
Tags: car, car dealers, creative accounting, finance, George W. Bush, United States, USD
