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Fiscal cliff not a big threat to car sales, Edmunds analysis says

November 20, 2012
As 2012 winds down, so too does the country come closer to the fiscal cliff — the $600-plus billion slate of mandatory tax increases and government spending cuts due to take effect Jan. 1.
 
In the worst case scenarios, analysts claim that “going over the cliff” could reduce GDP and send the country spiraling into recession in 2013. The good news is that even the experts assign a low probability to the government doing nothing about the potential fiscal changes.
 
The more likely compromise scenarios involve more limited tax hikes and spending cuts and, as such would have a more limited economic impact, including on car sales in 2013.
 
President Barack Obama ran on a platform of raising taxes. In particular, he has strongly supported letting the Bush-era tax cuts expire for individuals earning more than $200,000 and households earning more than $250,000 a year.
 
But according to Edmunds, such tax increases would affect only about 4 percent to 5 percent of car buyers, and those wealthy buyers would not be less likely to make car purchases.
 
 

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