Car makers across the board in America are reporting hikes in recent sales, with higher-end models doing their fair share of business as well. So it is no surprise that with the news that the Bush tax cuts will most likely be extended, corporate head honchos are placing their orders for luxury new vehicles for themselves and family members.
Lest we think the tax cuts will only benefit Ritchie Rich, however, let's try and understand how the purchase of new luxury vehicles will benefit the rest of Americans. A lesson in trickle-down is in order.
Since everyone is going to get a tax break come 2011, Joe Average, who is hoping to get his job back at Howdy-Do Burgers, will soon be in the market for a used vehicle. Mr. Rich just happens to finally be able to trade in his 20-year old second car, a Mercedes, (which has only a few minor mechanical problems) for a 2012 model. As luck would have it, both Mr. Rich and Mr. Average are visiting the same Mercedes-Benz dealership on the same day. Mr. Average, of course, not seriously looking and more in a dream-like state, but Mr. Rich there to wheel and deal. At the end of the day, Mr. Rich is in a new model and well, Mr. Average is putt-putting his way home in his dream car.
The trickle-down economics theory doesn't have to be that complicated. The extension of the tax breaks will get America back on its feet and ultimately, it is the neighborhood car mechanic who is really going to make out in the upcoming economic boom. Now where did he put that 2012 Mercedes-Benz catalogue?