Dealers hope federal stimulus package adds horse power to sales

By Christy Hendricks
CAPE GIRARDEAU, MO (KFVS) - Car, motor home, and motorcycle dealers are hoping the federal stimulus package puts some extra horse power in their sales.
If you buy a new vehicle, you get a tax credit and at least one local car dealer says he's seen an increased interest in new cars since the stimulus bill was signed last Tuesday. 
With rows of shiny new cars on his lot, dealer Bob Neff hopes the stimulus package will help new owners drive some of them away.
"In addition to the rebates and zero percent financing and things like that, this is that little bit of icing on the cake to try to just push a few more people over into saying 'Okay now is the time. It's ok to do it,'" said Neff with Ford Groves in Cape Girardeau. 
If you buy a new car, motorcycle or motor home, you can deduct the sales tax on the purchase from your income taxes.
It applies to the taxes up to $49,500 worth.
"At a six percent tax bracket that's about $3000," said Don Hill, general manager of Younblood Capetown RV. "You'll be able to deduct that $3000 as an expense which should give you about a $750 bottom line tax break if you're in a 25% tax bracket. Obviously (if you're) higher or lower it adjusts from there."
While motor homes make up only about 20 percent of the business at Youngblood Capetown RV, Hill says anything to help foster new sales helps.
"This small step that they're taking is probably not a huge step," Hill said. "We'd like to have seen a bigger step but obviously every little bit helps."
That little bit is what Congress hopes will push more people to buy new, helping not only dealers but also manufacturers.
Neff says before the stimulus package, more people were looking at buying used, but now, he's seen an uptick in new sales.
"Hopefully the stimulus package will help," Neff said. "I don't know that we see the light at the end of the tunnel yet but there's something there."
The tax relief applies to new vehicles bought for the rest of 2009.
There are some income guidelines.  The tax deduction is subject to a phase out for taxpayers with more than $125,000 in income or $250,000 for a joint return.