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Auto Industry Generating $135 bil in Annual Taxes

“A massive economic driver.”

by on Apr.11, 2012

It's that time of year, again.

Before fretting over the check you might have to write Uncle Sam in the coming days consider the hefty tax payout the auto industry makes each year – about $135 billion annually, according to a new study by the Center for Automotive Research.

In fact, the industry generates about 13% of all state tax revenues, according to the CAR study which was commissioned by the trade group the Alliance of Automobile Manufacturers, or AAM.

If anything, “As economic conditions continue to improve, auto companies could see an increase in sales and employment that would generate additional state and federal tax revenues,” said Kim Hill, director of the Sustainability and Economic Development Strategies group at CAR and the study’s lead researcher.

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About $43 billion of those taxes go to the U.S. Treasury — $14 billion in the form of income taxes and another $29 billion from federal motor fuel taxes.

The study found that $91.5 billion went into various state coffers, equaling about 13% of what the 50 states take in from taxes.  Of that, $30 billion comes from taxes and fees on the sale and service of automobiles – half of that from new vehicle sales.  The rest, more than $60 billion, is generated from state fuel taxes, licensing and registration fees, according to CAR.


Automakers Launching Ad Campaign Attacking 56.2 MPG Proposal

Industry radio spots to warn of threat to economic recovery.

by on Jul.18, 2011

Will the ads sway consumers in favor of industry concerns or rally support for higher mileage standards?

The auto industry is going on the attack – a trade group launching a radio campaign this week aimed at shooting down the big increase in federal fuel economy standards being proposed by the White House.

The 60-second commercials, produced for the Alliance of Automobile Manufacturers, will argue that boosting the Corporate Average Fuel Economy, or CAFE, standards to 56.2 mpg in 2025 “threatens (the) progress” of the auto industry’s fragile recovery – and could force Americans out of the big cars and trucks they love and into small, limited-use electric vehicles.

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The industry campaign could present another headache to the Obama Administration, which is currently focused on hammering out a compromise with the Republicans on a bill to increase the nation’s debt ceiling.  But the automotive alliance also risks alienating consumers who are worried about the impact of near-record fuel prices and who, surveys show, are demanding big increases in fuel economy.  Mileage, a senior Ford official last week acknowledged, is the single most important concern for most American car buyers this summer.

But the Alliance ads will target an equally serious public concern: jobs.  A recent study by the Ann Arbor, Michigan-based Center for Automotive Research warned that such a big increase in the federal mileage requirements could tack up to $10,000 onto the price tag for the typical American automobile.  In turn, the CAR study warned, that could reduce by a third total American car sales and cost hundreds of thousands of auto industry jobs in the U.S.

The industry ads will launch Tuesday and air in seven markets, notably including Michigan and Washington, D.C.

The copy proclaims that, “After tough times, today’s automobile industry is on a highway to recovery.”  But it warns that the proposed increase in fuel economy “threatens that progress” and might not only result in sharply higher prices, but also in an “electric car mandate.”

Not everyone agrees with the industry’s contention.  Environmental groups, such as the Union of Concerned Scientists, have argued that the automakers are using scare tactics – the same moves that kept fuel economy rules from increasing through much of the ‘90s and first decade of the new millennium.

They also are criticizing the industry for talking about a turnaround that, for at least some makers, was taxpayer-funded. “We give GM billions of dollars, and what do taxpayers get in return? Opposition to a process that will clearly save them income and give them improved cars,” said consumer activist Ralph Nader.

Proponents of a sharp increase in federal mileage standards have their own data to point to, a new study by the Boston Consulting Group that predicted the industry could achieve big gains for just about $2,000 a vehicle – a figure the study’s authors noted would readily be recovered on fuel savings – especially if gas prices continue to rise.