Trump’s Car Loan Tax Deduction: Who Really Benefits?

Trump’s Car Loan Tax Deduction: Who Really Benefits?

So, Donald Trump is proposing that interest payments on car loans be tax-deductible, but only if the car is made in America. Sounds great, right? “Finally, a win for the working class!” you might say. But hold on, let’s break this down a little bit.

Who’s actually going to benefit from this? The answer is: those who itemize their taxes. And guess what? Most people don’t itemize their taxes. Only those in the higher income brackets are really in a position to do that. If you’re not itemizing, this doesn’t apply to you.

Now, who are these “itemizers”? Well, for starters, the top 1%. In fact, 91.5% of all itemizers are in the top 1%. These are the people who already get deductions for things like mileage and vehicle maintenance. So they’re not only getting the benefit of this new deduction, but they’re also likely already deducting car expenses anyway.

Let’s dig a bit deeper: Only 1.2% of the bottom 20% of earners itemize. And for the 20-40% income bracket, only 2.5% are itemizing. So, while this sounds like it’s for the working man, it’s actually the wealthier folks who are going to enjoy the real benefits.

Now, let’s talk about the working class. When you think of the working man, you probably picture someone blue collar, right? Someone who’s working hard for their paycheck. Well, the top 1% and 5% are who’s going to take advantage of this. They’re the ones who are already in a place where they can itemize and have the extra expenses to deduct.

And here’s the kicker: Most of these top earners pay cash for their cars, so they won’t even be benefiting from this interest deduction. But the working man who’s trying to make ends meet and can barely afford a car loan? They likely won’t qualify for the deduction because they aren’t itemizing.

In conclusion, while this might sound good on paper, this isn’t really a win for the working class. It’s a win for the wealthy who can already afford cars and the luxury of itemizing their taxes. So unless you’re in that top income bracket or you itemize your taxes, don’t expect this to benefit your bank account anytime soon.