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U.S. Auto Industry Generated $135B In Tax Revenue in 2010

May 18, 2012

A recent study conducted by the Center for Automotive Research (CAR) shows that the auto industry generated about $43 billion in federal tax revenue, and over $91.5 billion in state government revenue, in 2010. Some see this as proof positive of the necessity of the auto industry bailout, and figures such as these are coming up a lot in the ongoing 2012 presidential election debates.

What do you think of the stats? Do you agree with the 2009 auto bailout? Do you think the automotive industry has had as significant of an economic impact over the last several years as the researchers in this article suggest?

Study: U.S. auto industry generated $135B in tax revenue in 2010

Ellen Mitchell

DETROIT — The auto industry generated more than $135 billion in federal and state revenue in 2010, a new report says.

In a study released today by the Center for Automotive Research, a nonprofit research organization in Ann Arbor, Mich., the production, sales, service and use of vehicles generated at least $43 billion in federal tax revenue and more than $91.5 billion in state government revenue in 2010.

Of the $43 billion in federal tax revenue, $14 billion came from income taxes and $29 billion from federal motor fuel taxes.

The study backs arguments in favor of the 2009 automotive bailouts, which have become a hot-button topic for the 2012 presidential election. The Obama administration has defended and taken credit for the 2009 bailouts, which were first initiated in 2008 by the Bush administration. Republicans, led by primary front-runner Mitt Romney, have criticized the bailouts as a wasteful use of taxpayer money.

The figures released today stand in contrast to a report released last week by the Congressional Budget Office, predicting the federal government will likely lose about $19 billion on the bailouts and the loans it extended to General Motors, Chrysler, their finance arms and suppliers. Bailout defenders contend the moves saved General Motors and Chrysler Group — along with about a million U.S. jobs — while the automakers undertook government-sponsored bankruptcy reorganizations.

“This study confirms that the U.S. automotive sector has a huge economic impact throughout the country,” Mitch Bainwol, CEO of the Alliance of Automobile Manufacturers, said in a statement. “Auto policy is central to the economic vitality of virtually every state.”

The study, produced by the Sustainability and Economic Development Strategies group at CAR, found that vehicles generated revenue from income taxes, sales taxes, corporate income taxes, licensing and registration fees, and fuel taxes.

The study also found that the automotive industry accounted for 13 percent of total state tax revenues on average, with vehicles generating 15 to 23 percent of state tax revenues in 18 states.

Kim Hill, the study’s lead researcher, said that as economic conditions continue to improve, auto companies could see an increase in sales and employment that would generate additional state and federal tax revenues.

Revenues from car sales alone totaled over $564 billion in 2010, an increase of 17 percent from 2009. The manufacturing and sale of parts, plus repairs and services accounted for another $173 billion in economic activity, according to the study.

“In this country, 8 million people are employed directly and indirectly as a result of the manufacture, sale and repair of automobiles,” Bainwol said. “Those 8 million people earn $500 billion in compensation. And as jobs are added, these numbers will climb.”

You can reach Ellen Mitchell at emitchell@crain.com.

Read more: http://www.autonews.com/article/20120411/OEM/120419967#ixzz1vFm5pmk2

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