What We Can Learn from the Car Pros About Tax Reform

Every weekend, I like to listen to the Car Pro guys on the radio when I’m driving around town.

In case you’ve never heard the show, the Car Pro – whose real name is Jerry Reynolds – is a former big-time car dealer in Texas. He and his sidekick Kevin McCarthy (no, not that Kevin McCarthy) give callers advice on buying new and used cars.

One of the most common questions they answer each week involves people trading in their cars. Callers routinely ask whether they are getting the best trade-in value possible for their old Hondas and Chevys.

Jerry’s answer is always the same. The trade-in value the dealer puts down on paper in a sales contract doesn’t really matter. What matters is the bottom-line price you are paying for the car. If you get a poor value for your trade in, who cares if that is more than offset by huge discounts elsewhere that lower the overall price of the car.

Watching the debate over tax reform heat up in Washington, I think everyone who is an interested party in the debate should heed the advice of the Car Pro guys.

There has been a lot of pre-emptive hand-wringing over Congress and the President potentially doing away with popular tax credits as part of tax reform.

Read any California newspaper in recent weeks, and you’ll see some commentator bemoaning the end of the deductibility for state and local taxes. Recently, Assemblyman Matt Dababneh, D-Woodland Hills, introduced Assembly Joint Resolution 26, calling on Congress to reject efforts to eliminate or modify the home mortgage interest deduction.

On this week’s “Another Round with PRI” podcast, we talk with PRI’s senior fellow in business and economics Wayne Winegarden about the tax reform debate.

I make the case that we should take Jerry’s advice to heart. Everyone who is worked up about tax reform should stop bemoaning the potential loss of politically-favored tax credits and incentives until we see the overall deal.

If at the end of the day we are paying less in taxes despite the elimination of the various credits and rebates that benefit us today, that sounds like a good deal in my book.

At the end of the day, if federal tax reform doesn’t end up being a good deal for California, Washington should not be the target of our anger. Right now, taxpayers in other states subsidize federal deductions and credits that give Californians relief from high taxes. By eliminating them, Californians will fully bear the burden of the costly tax burden imposed by the Legislature. Even if federal tax reform is not a good deal for the Golden State, it will hopefully inspire overtaxed Californians to demand that state lawmakers get serious about state tax reform in Sacramento and act now to lower this punishing tax burden.

Tim Anaya is Communications Director for the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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