Tom Kean: Corzine Administration Taxes ‘Cash to Clunkers’ Stimulus

Senate Republican Leader Tom Kean issued the following statement after learning that the Corzine administration will tax the vouchers that new car buyers receive under the so-called “Cash for Clunkers” federal stimulus program. Pennsylvania and Connecticut reportedly are among the many states that will not tax federal vouchers.

“Leave it to the Corzine administration to penalize New Jersey residents who gather the courage and the scarce resources needed to buy a new car during these uncertain times,” Senator Kean said. “It makes no sense to reduce the benefits of stimulus aid when the economy is still ailing. The governor should overrule this new nuisance tax immediately.”

Democratic leaders in Congress are racing to provide more money for the so-called Cash for Clunkers program because it has turned out to be one of the most powerful federal economic stimulus measures yet enacted. The program has helped lure thousands of cash-strapped buyers into local car dealerships desperate for sales. Their car purchases are boosting employment and economic activity across the nation.

Instead of allowing the vouchers to create the maximum amount of private sector employment in New Jersey, the Corzine administration has ruled that the $3,500 or $4,500 vouchers paid to new car buyers are subject to state sales tax. That could cost each car buyer in New Jersey more than $200 each, if the vouchers are taxed fully at the 7 percent state rate.

“This policy will particularly hurt small businesses and middle class taxpayers who must replace their worn-out vehicles,” Kean said. “It just makes no sense to make New Jersey less affordable during a recession by taxing aid that taxpayers provided. It’s cynical government policy and incredibly short-sighted economic policy. I urge Governor Corzine to reverse this decision today.”