Gaming the System Yet Again

Over the past few years I’ve written in this space about a number of activities that can be described as “gaming the system” – actions that do not break any actual laws, for the most part, but use loopholes, exceptions, or scenarios that the framers never imagined in order to pervert government or business offerings to their own benefit. Whether this is a good thing or a bad thing depends somewhat on your point of view; there are some cultures in the world where this type of behavior is both expected and advocated (to the point where if you told people from those cultures that “gaming the system” was wrong they would have no idea what you were saying), while other people would tell you that they are actually doing good by pointing out the holes in the system and helping the agency responsible to write better regulations and think things through. People of very strict moral compass will still claim that this sort of thing is no better than fraud, while more and more these days, people seem to be thinking that if the executives of huge companies can enrich themselves at taxpayer expense while impoverishing their employees and customers, it’s everyone for him or her self...

Even those last people might find the idea of car dealerships “buying” their own hybrid cars to get the $7,500 tax incentive and then selling the vehicles as “used” (for a 2% discount over sticker price) to be repugnant, however. I found the story on the MSNBC site , but it’s turning up in a number of other places online. Just how widespread it might be remains in question, but the linked story documents at least three cases of it occurring in the Los Angeles area – and quotes an automobile dealer who refers to it as “gaming the system” and not outright fraud. Certainly, the IRS code (which is also cited in the linked article) is murky enough to put this well into the grey area – there does not appear to be anything in the law that says you can’t do this, probably because in the normal course of business no one ever would. Declaring a car to be “used” normally drops its book value enough that no dealer would dream of doing so; it’s only because of the demand for Volts that this is possible at all. Of course, there’s also some question about how often this is happening…

According to the GM spokesperson cited in the article, the company is only aware of ten such cases since the Volt was first introduced to the public, and half of those are clearly dealerships selling Volts to other businesses (in some cases, other dealerships) in places where no Volt units are available for purchase. More to the point, the company can’t take responsibility for such actions anyway; as noted before in this space, dealerships are franchise businesses that are not owned or controlled by the company that makes the cars. The IRS could change the regulations relating to hybrid tax credits, or Congress could pass laws that make this sort of chicanery illegal, but so far neither of these things has happened, which means that this is just another case of companies (the dealerships) who are taking advantage of poorly-written Federal programs to make money off of the taxpayers – which is to say, you…

Now, I’m not suggesting that any of my readers (assuming I have readers) are actually trying to game the system in any way, or condoning anyone else who does. I’m just pointing out that most of the time the system is bigger than you are, wealthier than you are, and unlikely to allow itself to suffer in order for some random schmendrick to make a few bucks at its expense. When somebody talks about gaming the Federal government, the dollars that they’re taking are yours, and one of the people being defrauded (in principle, if not by the letter of the law) is you. It’s something you might want to keep in mind the next time the subject of gaming the system comes up…