How about the $3500 rebate on some new cars! The tax is figured
before the rebate.

Not if you have them apply the rebate to your trade-in value... in the case of
any trade-in you only pay tax on the difference between the trade-in and the
final selling price of the new car (the reason being: you've already paid the
sales tax on your trade-in when you orginally bought it).

Unless your state is weird in that regard.

Neil