Should Taxpayers Back Cars Only the Rich Can Afford?

theodp writes "The NY Times questions the $400M in low-interest federal loans requested by Tesla Motors as part of the $25B loan package for the auto industry passed by Congress last year. 'The program is intended to encourage automakers to improve fuel efficiency, but should it be used for a purpose like this, as the 2008 Bailout of Very, Very High-Net-Worth Individuals Who Invested in Tesla Motors Act?' Tesla says it is assembling about 15 cars a week and has delivered about 80 of its $109,000 base-price Roadsters to date, many of which have gone to the Valley's billionaires and centimillionaires who are Tesla investors as well as early customers. We discussed the company's financial difficulties last month."

Comments

Re:Taxpayers shouldn't be bailing out any of these

[mi]

I hear that bogus line so many times, it's a Rush Limbaugh talking point with no basis in reality.

There is nothing bogus in it — the tax rate is very high, and those, who don't pay any simply have no net income left. Read your own link carefully and you'll see:

some corporations reported zero income before deducting expenses while others said they had zero net income after deducting expenses. Either way, those companies reported no tax liability, the GAO said

and, even easier to understand and feel:

But many of the companies the report found had paid no tax were likely small businesses that pay other taxes. Generally, many small firms, because they do not have shareholders, are able to shift corporate income to individual income.

Being an owner of one such small business, I can confirm this — at the end of each year, whatever is left on the business account, is paid to me as salary/bonus: from which I pay income tax. This leaves the corporation with zeroed-out income. Leaving money on the business account makes no sense — the corporation would have to pay tax on it first, and then, if it ever decides to pay employees (or shareholders) with it, those people would have to pay income tax on these same monies. Better to dispense with it right away. And if you need money later, you can borrow, because interest rates are much lower, than taxes (unless we are in a credit-crunch).