S.1653 - United States Automobile Consumer Assistance and Relief Act; USA CAR Act (119th Congress)
Summary
The "United States Automobile Consumer Assistance and Relief Act" (USA CAR Act) aims to amend the Internal Revenue Code of 1986 to allow a tax deduction for qualified automobile interest. This deduction would apply to interest paid on loans for new cars, provided the final assembly of the vehicle occurs in the United States.
The bill defines a "qualified automobile" as one assembled in the U.S. and specifies that the deduction would be available above-the-line, meaning it reduces adjusted gross income.
The Act intends to incentivize the purchase of domestically assembled vehicles by reducing the financial burden on consumers through tax relief.
Expected Effects
If enacted, the USA CAR Act would likely lead to increased demand for automobiles assembled in the United States. Consumers would be able to deduct interest paid on their car loans, effectively lowering the overall cost of purchasing a new vehicle.
This could stimulate the domestic auto industry and create jobs in manufacturing and related sectors. The change would also affect individual tax returns, requiring adjustments to account for the new deduction.
Potential Benefits
- Reduced cost of car ownership: Consumers can deduct interest paid on auto loans, lowering the overall cost.
- Incentive for buying American-made cars: Encourages consumers to purchase vehicles assembled in the U.S., supporting domestic manufacturing.
- Stimulation of the domestic auto industry: Increased demand for U.S.-assembled cars can boost production and sales.
- Potential job creation: Increased auto production could lead to more jobs in manufacturing and related industries.
- Tax relief for individuals: Provides a new deduction that can lower individual tax liabilities.
Potential Disadvantages
- Potential revenue loss for the government: The tax deduction could reduce overall tax revenue.
- Complexity in tax filing: Individuals will need to track and calculate qualified automobile interest for the deduction.
- Limited benefit to those who don't itemize: Taxpayers who take the standard deduction will not benefit.
- Possible inflationary pressure on U.S.-assembled cars: Increased demand could lead to higher prices.
- Excludes foreign-assembled vehicles: May disadvantage consumers who prefer or need foreign brands.
Most Disadvantaged Areas:
Constitutional Alignment
The bill appears to align with the Constitution's general welfare clause (Preamble). It aims to promote economic activity and provide a benefit to citizens by reducing the cost of purchasing domestically produced automobiles.
Article I, Section 8 grants Congress the power to lay and collect taxes, duties, imposts, and excises, which implicitly includes the power to create tax deductions and incentives. The bill does not appear to infringe on any specific constitutional rights or limitations.
However, the focus on domestic manufacturing could be viewed as potentially conflicting with the spirit of free trade, although the Constitution does not explicitly prohibit such measures.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).