Hummer tax break gets hammered

[godai]

I've heard off and on about this ridiculous tax credit which has promoted 6000 lb SUV gas guzzler sales over the past 5 years or so. Seems it created 'free SUVs' for those qualifying but we all ended up paying for these tax credits.
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Under the Jobs and Growth Act of 2003, Congress raised the deduction ceiling for these heavy-class vehicles from $25,000 to $100,000, bumped the "bonus deduction" from 30 percent to 50 percent, and left in place the accelerated five-year depreciation schedule. This, in effect, made virtually all three-ton, business-use SUVs fully deductible in the first year. More than 50 vehicles qualified for the tax break.

Sure enough, tax-savvy self-employed professionals such as doctors, dentists and yes, accountants, connected the weight of today's luxury SUVs with the obscure tax loophole and started sporting heavy iron in order to deduct the entire purchase price in the first year. Which might explain why traffic lanes have seemed a little narrower lately.

Congress reversed itself last fall with passage of the American Jobs Creation Act of 2004 and cinched back the SUV loophole from $100,000 to $25,000 while retaining both the 50-percent bonus deduction and the five-year depreciation schedule. The deduction is claimed as a Section 179 expense, meaning you must be in business, filing a Schedule C or corporate tax return, to claim it.

Will the lower expense ceiling stop the heavy-metal stampede? Not likely, says Ronnie Windham, a certified public accountant in Oxford, Miss.

"I don't think it's going to affect people's buying habits. Most people buying SUVs are paying $40,000 or $50,000, so by the time you take the 50 percent bonus deduction and the $25,000 depreciation expense, most of them are still going to write off the full amount."

Windham notes that SUVs also enjoy what is called a maker's depreciation. "There's no dollar limit on the amount you take off each year, it's just based on what the vehicle cost. It actually takes you about six years to fully write off a five-year vehicle," he says.



http://www.bankrate.com/brm/itax/biz_tips/20030403a1.asp

[patrice]

1. .

:grr: :grr: :grr: :grr: :grr:

[Kalyke]

2. Proving again that the Big 3 were selling what Americans wanted to buy.

They weren't creating a market, they were selling into a pre-existing one. One that was manufactured by tax cuts and opulence.

BTW, Ford has a plan. Their plan has been explained in newspapers since summer. Why can CITI get a bailout and Ford can't?

[sandnsea]

What the Oil Administration incentivized people to buy

Clinton put the incentive in the internet and technology. Bush put it in these gas guzzlers and phony mortgage schemes.

[godai]

6. Yes, Democrats tried to fix this in 2007.

I don't know what the current situation is but this article describes the status in 2007.
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WASHINGTON -- As automakers face a key Senate vote on fuel economy regulations next week, lawmakers introduced a new bill Friday that could shrink sales of large vehicles.

The new bill targets a controversial tax incentive that allows small businesses to write off up to $25,000 of the purchase of the largest pickups and sport utility vehicles.

The sponsors, including U.S. Rep. Ed Markey, D-Mass., chairman of the House select committee on global warming, and Rep. Rahm Emanuel, D-Ill., head of the House Democratic caucus, said the bill would fix a "serious mistake" they called the "Hummer tax loophole." More than 30 vehicles -- including the Hummer H2, Chevrolet Suburban, Ford Expedition, Lexus LX 470 and Dodge Durango -- qualify for the break.

Congress amended the tax break in 2004, reducing it from $100,000 to $25,000, and it only applies to small businesses, though not all small companies are eligible for the full break.

The Alliance of Automobile Manufacturers, which represents Detroit's automakers, Toyota Motor Corp. and others, said the tax break is necessary.

"These are vehicles that small business owners across the country depend on for their way of life," said spokesman Charles Territo. "This effort is an assault on the hardworking men and women who rely on these types of vehicles for a living."

Markey claims the tax break can be misused. "Forget about zero-percent financing, this kind of incentive unfairly skews the market away from the more efficient, cleaner cars and SUVs American businesses and families say they want," Markey said. "Our government is essentially choosing Hummers over hybrids."




http://www.detnews.com/apps/pbcs.dll/article?AID=/20070616/AUTO01/706160358&theme=Autos-Green-tech-hybrids

[Phred42]

3. Making it availabel is one thing - making the REST of us pay for it is another

[Billy Burnett]

4. USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA

USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA USA

We're #1.

[Lex]

5. I have 2 doctor friends who took advantage of this tax loophole on

giant SUVs and encouraged me to as well. It sounded like madness and big FU to everyone else. I stuck with my 5 year old, paid-for silver PT Cruiser which is small, low to the ground (less rolling over as SUVs are prone to do), gets 25 mpg, and does just fine for me. If I get a new car, it'll likely be a hybrid or one that gets much better gas mileage.

[madrchsod]

7. i know of two hummers that are actually used for business

a road building contractor and the owner of a bison farm. all the other hummers i have seen your either women or macho men

[mdmc]

8. kick