Luxury Tax

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The auto luxury tax was a 10% tax on the retail price of cars over $30,000. In 1993, Congress repealed luxury taxes on boats, planes, jewelry and furs, but not on cars. Rather than repeal the tax on autos, Congress indexed its threshold to account for inflation.

As part of an industry-wide working group, AIADA successfully lobbied Congress to begin phasing out this tax on America's small business auto dealers. On August 28, 1996 the tax rate decreased from 10% to 9%. It rate will continue to decrease by 1% each year until January 1, 2003 when the tax will expire. As of January 1, 2001, the luxury tax is calculated at 4% of the amount of the selling price in excess of $38,000.

39,795 - 38,000 = 1,795 X .04 = 71.80

origional tax would have been:
9,795 X .1 = 979.5, tax now 907.70 lower, pays for interior upgrade

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Thanks, NE Bluebird for the Luxury Tax info. Unfortunately for me, since I am paying $5000.00 over sticker, guess I'll have to pay about $231.00 lux. tax. But that sure isn't as bad as I thought it would be!
Steve, I'm a little surprised that you are paying $5k over MSRP. My dealer here in San Diego quoted me MSRP and the $500 deposit locked the price in. He even told me that I would be getting something from Ford that I would have to sign that prohibits me from reselling the car for a "quick" profit. How that works I'm not sure. He said they didn't want the same thing happen as the PT Cruser. I'm really curious how may that put a deposit down was quoted more than MSRP and by how much.
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