Tax breaks for the rich that undermine national security

[Ivan Seeking]

Federal tax rules that took effect last month allow a credit of up to $3,150 for anyone buying a hybrid car. The credit is the same regardless of tax bracket.

However, owners of small businesses who buy a Hummer, Ford Excursion or other SUV weighing more than 3 tons get a deduction of up to $25,000 if they use the vehicle exclusively for work. The amount of tax savings from the deduction depends on their tax bracket.

The benefits don't stop there. Once they subtract the $25,000 from the cost of their 3-ton SUV, small business owners can deduct the depreciation on the remaining amount. Someone who bought a $60,000 SUV, for example, can claim the remaining $35,000 over six years.

No such luck for small business owners who buy cars weighing less than 3 tons. [continued]

http://www.pressofatlanticcity.com/business/national/story/3181469p-11893943c.html

So, tax breaks that help to increase the demand for oil... Whose side are these guys on?

 

[TheStatutoryApe]

I'm happy that they reinstated tax breaks for hybrid cars. The House I think it was had removed that part from the energy bill.

 

[chroot]

The loophole offered by this law has been widely noted in the recent past. It was written into law long before any "passenger" vehicles weighing more than three tons hit the market.

This very law has encouraged many people to buy larger-than-necessary vehicles to get the enormous tax break.

What's -really- hilarious is that it's actually illegal to drive a vehicle of more than three tons gross on many of the residential roads in California. Many of the people who buy these SUVs to drive as if they were enormous "cars" around residential areas are actually breaking laws left and right.

- Warren

 

[Ivan Seeking]

While still working for da man, almost everyone that I worked with drove a company SUV. NONE of them needed one. It was a status symbol.

 

[loseyourname]

I'm no expert on the federal tax code, but this doesn't make sense. A friend of mine from some years back owned a commercial website that sold goods and he deducted the payments on a Dodge Viper he owned simply by putting the name of the website on his car and claiming it as an advertising expense. From what I know, what he did was technically legal, even though he wasn't specifically using a vehical deduction. Putting aside the fact that a Viper uses more gas than an SUV (he could have done the same with any car), it seems that if what he did was in fact legal, a small business owner could deduct the cost of a small car just as effectively as that of an SUV. He would simply need to be a little bit more creative in how he gets the deduction.

 

[Ivan Seeking]

I don't think that would fly. He would have to show that he only used it for advertising or only a percentage as applied to the total use would apply; in fact in that case you can sometimes only take the milage deduction. In order to deduct the entire purchase or use of a company car, it must be for company use only.

But what people do is another thing...

 

[Ivan Seeking]

A tax disincentive to use gas hogs would be easy.

 

[chroot]

From slate.com:

It's no accident the automakers churn out so many SUVs that break the 6K barrier. By doing so, these "trucks" (and that's how they're classified by the U.S. Department of Transportation) qualify for a huge federal tax break. If you claim you use a 3-ton truck exclusively for work, you can write it off immediately. All of it. Up to $100,000 (in fact, Congress raised the limit from $25,000 just last year). Heavy SUVs qualify for similar state tax breaks in California (up to $25,000) and elsewhere. These vehicles are also exempt from the federal "gas guzzler tax" because they're trucks. (And you probably know that many SUVs are exempt from the tougher gas mileage and safety standards of cars because they're classified as trucks, but that's another story.)

- Warren

 

[crazycalhoun]

So, tax breaks that help to increase the demand for oil... Whose side are these guys on?

I don't see you clamoring to banish Muslims from the US or other Western countries.

 

[Skyhunter]

A tax disincentive to use gas hogs would be easy.

Senator Barbara Boxer proposed re-classifying SUV's as cars last year, in order to close that loophole. Sounds easy enough, but it never happened.

I have a friend who is a real estate broker. He bought an Excursion for the tax break and a Prius for mileage.

 

[loseyourname]

I don't think that would fly. He would have to show that he only used it for advertising or only a percentage as applied to the total use would apply; in fact in that case you can sometimes only take the milage deduction. In order to deduct the entire purchase or use of a company car, it must be for company use only.

But what people do is another thing...

No, he didn't get the entire payment deducted. I'm not sure how much it was, but I am pretty sure it was more than the $25,000 (okay, I just saw Warren's post that it was raised to $100K - jeez). It might have just been that he used networking heavily. He really did drive the car around to meet with people trying to get them to buy into his project, using the car as a demonstration of how much money they could potentially make. I suppose not just any business could claim something similar.

 

[Smasherman]

Senator Barbara Boxer proposed re-classifying SUV's as cars last year, in order to close that loophole. Sounds easy enough, but it never happened.

I have a friend who is a real estate broker. He bought an Excursion for the tax break and a Prius for mileage.

Couldn't car production companies just re-classify their vehicles as something that is not an SUV? Afterall, vehicle classifications such as "SUV" aren't controlled by the government, are they?

 

[Skyhunter]

Couldn't car production companies just re-classify their vehicles as something that is not an SUV? Afterall, vehicle classifications such as "SUV" aren't controlled by the government, are they?

For tax purposes they are.