December 22, 2008
New American Discusses Auto Bailouts, Cites State Business Tax Climate Index to Analyze Michigan
"Auto Bailout: Lemon or Lemonade?"
By Alex Newman
Government regulation and taxation have also harmed the automobile companies (as they have the entire economy). GM paid $37 billion in taxes in 2007. Foreign competitors pay what's called a Value Added Tax (VAT) on each vehicle sold, which works against the American companies. For instance, German car companies pay a 19-percent VAT, but this entire tax is reimbursed to the companies if they export the vehicle (no tax). If an American car is sold in Germany, the VAT gets added to the American car, making it hard for American companies to compete overseas. Those are just the federal tax problems. The Tax Foundation rates Michigan's corporate tax structure as the worst in the nation. Additionally, the current financial meltdown has contributed to the sales slump and compounded the problem of paying off huge debts.
