“Cash-for-Clunkers”: Made in Germany

Saturday, June 13th, 2009

One element in a new spending bill now agreed to by both the US House and Senate is a provision which would provide a US Government voucher of up to $4,500 to Americans to trade in their old automobile for a new one – preferably one more fuel-efficient. It does seem that, as things have proceeded through the legislative process, the motivation of stoking domestic demand for new automobiles has plainly won out over the initial environmental reasoning behind the measure, but at least it does seem pretty guaranteed that the former aim will be accomplished. That much we know from the experience in the country that implemented this idea in the first place, and Birgit Marschall and Martin Kaelble of the Financial Times Deutschland point out that this Abwrackprämie, or “scrapping premium,” is namely a German fiscal innovation. (more…)

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