Tax deduction for big cars ?

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Rono

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Just a question for info.

Here on the news ( dutch television ) was a item about big gasconsuming cars ( svp`s ) like the hummer. The newsreader was telling that if you buy such a big car, you get a tax deduction. Is this true ?

Read you,...
 
i always admire the wealthy middle to upper classes suburbanites who feel the need to have such a rediculous vehicle. if you live in the country, thats one thing. but to drive that when you face little to no environmental hazards is rediculous.

thanks george for looking out for the rich! :up:
 
here is an article

Tax break fuels SUV purchases

By Jeff Plungis

The Detroit News

WASHINGTON ? Karl Wizinsky wasn't thinking about buying a new vehicle, and certainly not a big SUV.
So why is there a brand-new $47,000 Ford Excursion sitting in his driveway? He was able to write off $32,000 of the purchase price as a business expense.
"We really did it because it was a pretty hefty deduction," said Wizinsky, a health-care consultant in Novi, Mich.
While the tax code allows big business-expense write-offs for SUVs, prospective buyers of fuel-efficient hybrid cars qualify for a tax credit of only a few thousand dollars.
The law seems counter to national goals of improving vehicle fuel efficiency to reduce U.S. dependence on foreign oil and cut greenhouse gasses. But accountants and auto dealers are touting it. Small-business owners such as Wizinsky are advised that buying a gas-guzzler is a way to cut end-of-the-year tax bills.
"We recognized it immediately and started informing people about how to use it," said James Jenkins, an accountant in Southfield, Mich. "It's just fabulous. My clients have been drooling."
Jenkins said five clients have used the loophole and five more are considering it. He said he also test-drove several SUVs, thinking the deal might be too good to pass up.
"It makes you think very hard about it," Jenkins said. "But it was a 30 percent larger vehicle than I wanted."
Here's how it works: Suppose a business owner wants to buy a $45,000 luxury SUV for use in his business. He or she could write off $24,000 of the cost under section 179 of the tax code as accelerated depreciation.
Then the buyer could write off additional depreciation of the remaining $21,000 under a five-year schedule ? 20 percent, or $4,200, in the first year. That's a total $28,200 tax write-off. The balance of the vehicle could be written off over the next five years.
A more expensive large vehicle, such as a Mercedes E-class SUV, a Range Rover or a BMW X5, would qualify for an even greater tax break.
The break for trucks got bigger this year under a schedule Congress adopted in 1996. That year, businesses could claim $17,500 in accelerated depreciation on equipment. That lump sum increased to $20,000 last year. It went up to $24,000 this year. Next year and thereafter the deduction will be $25,000.
The 1996 schedule was part of congressional efforts to change tax laws to encourage business investment. The loophole was aimed at farmers, so their working pickup trucks would not be treated like luxury cars, for which the code is not as generous, tax experts say.
Long-standing limits on deductions prevent taxpayers from subsidizing luxury-car purchases, but the limits do not apply to 38 light trucks that weigh 6,000 pounds or more, including the Cadillac Escalade, Dodge Durango, Excursion and Lincoln Navigator.
For example, a business owner wanting to buy a Lincoln Town Car would have to live with a $7,660 deduction, one-fourth what he might save by buying a Lincoln Navigator. It would take more than 15 years to recoup the entire cost of the car.
There is no indication that federal officials want to close the loophole. A proposal to extend bigger tax breaks to environmentally friendly vehicles is stalled in Congress, and President Bush plans even higher depreciation tax breaks as part of the next round of tax cuts.
The government hasn't calculated the total cost of the tax break, but Taxpayers for Common Sense, a nonpartisan Washington, D.C., watchdog group, says it could cost taxpayers $840 million to $987 million for every 100,000 vehicles businesses buy, much higher than several other tax breaks:
? Credit aimed at making it easier for small businesses to comply with the Americans with Disabilities Act costs $525 million for every 100,000 uses.
? A tax credit to reimburse teachers for classroom supplies annually costs the treasury $250 million for every 100,000 uses.
? A provision allowing taxpayers to put up to $3,000 of tax-free earnings a year in private retirement accounts costs about $90 million for every 100,000 taxpayers.
Aileen Roder, program director for Taxpayers for Common Sense, questioned whether there is a national need to subsidize sales of the largest light trucks, given that Americans are buying SUVs in record numbers.
"This is one of the most lucrative breaks in the tax code," Roder said. "We're making it a fiscal no-brainer for businesses to buy giant SUVs."
In 1996, Congress estimated the five-year cost of the tax break ? for all business equipment ? to be $1.6 billion. But luxury SUVs had barely cracked the market at that time. IRS spokesman Bruce Friedland said the agency does not keep data on how much the tax break has cost.
 
did i mention that because they use more gas, it increases our dependancy on imported oil and harms the environment further at the same time? thats great thinking!
 
Cow of the Seas said:
did i mention that because they use more gas, it increases our dependancy on imported oil and harms the environment further at the same time? thats great thinking!

It is a strange way to plan for the future i guess.

Here in the Netherlands we did have a refund if you buy a car that is low on fuel consumption. Not anymore because it was a succes and it was to costly for the goverment :(
 
hey rono, but still, it was admirable of your country to at least to that for a time. it still gets the word out that the country is REALLY endorsing "better" cars.

im looking forward to hearing a defence on this.
 
Hmmmm. The way I read the Tax Code, the deduction is based on the cost of the vehicle - not the fact that it is an SUV. So it appears that the argument is not against the deduction, but for more social engineering through the tax code with penalty for SUVs (or vehicles with poor fuel economy, or exceeding a certain gross weight) - which I am not necessarily opposed to.
 
Cow of the Seas said:
did i mention that because they use more gas, it increases our dependancy on imported oil and harms the environment further at the same time? thats great thinking!
indeed. i'm just a tad bit pissed to know that while i only get $2,000 on the hybrid i was wanting, the assfuck parked next to me in his hummer is getting almost 20 times as much back!

at least i'll make up for it in gas consumption, seeing as my gas mileage would be about 20 times better. :laugh:
 
Rono said:


It is a strange way to plan for the future i guess.

Here in the Netherlands we did have a refund if you buy a car that is low on fuel consumption. Not anymore because it was a succes and it was to costly for the goverment :(

And the cars here (Netherlands, Europe) are already so much more fuel efficient than in other regions. In Europe the price of fuel is quite high. 1 Litre (which is about 1/3 gallon, IIRC) of regular fuel costs about 1.10 euro here (1.17 dollars with today's exchange rates). My car is a diesel one which is 80 eurocents a litre. Most of the price of fuel is taxation. It does, however, force the car manufacturers to build fuel-efficient cars. A normal vehicle will have a consumption of 1 litre of fuel for every 12-15 kilometres (8-10 miles), while a regular diesel will consume 1 litre for every 18-20 kilometres (12-14 miles).
Still, it was a bad idea to scrap that refund.

C ya!

Marty
 
Bush's new ecomonic stimulus package would increase the initial Section 179 dedcution to $45,000.00 from the current &25,000.00.

In defense of the original provision, it was created to assist large, expensive purchase of agricultural equipment like tractors, combines, ect. I live in a rural area and a new combine can run from $150,000 to $250,000 and that tax write off really helps farmers replace outdated equipment or constrtuction companies buy new bulldozers ect.

The problem was accountants found the loophole and the authors didn't exempt passanger vehicles. By adding this exemption into any new tax code would cut off this loophole. My accountant has recommended my husband buy a new truck next year to take advantage of this deduction.
 
Oh those tricky accountants...I worked at a tax prep firm for one tax season and they encouraged all of their clients to take any and all deductions they could legally get away with.

Since my husband and I opened our business, our highest tax bill has been $24,000 and our lowest has been $12,000...we don't own a home and have very few legitimate tax write-offs. Our business vehicle deduction saves us every year...I really would consider buying one of the larger trucks or SUV's for the bigger deduction. Unfortuntaly, I pay so much in taxes, I can't afford the higher payments so I'll have to stick to my mid-size SUV and take the standard deduction.
 
I want a Cadillac. Or an old Ford.

Or an american Military Jeep (sssshhh, don?t tell that to STING2, they?re cool).
 
my dream car would be a hybrid, the toyota prius. it's so expensive, though. the base model (which would be fine with me, the only thing it's missing is a cd player which i don't want anyway cuz i'm putting my car stereo in whatever new car i get) is just as much as my mom's new car, the toyota matrix. i don't think i can afford $400 a month car payments, plus the slight increase in my car insurance. i already pay $140 a month in car insurance.
 
Cow of the Seas said:
140 a month for car insurance? ouch. :S
it used to be $180. it went down when i turned 19. it's mainly because i was in a car accident a couple years ago. my insurance will look awesome when i'm 25. that's when it really goes down here, plus my accident will be removed from my driving record.
 
Uh oh. here comes Ms. Sharky, whose dad worked for Ford, whose Mom drives a Navigator....

First, its just like the tawealthy tax argument. Of course more expensive cars are going to more of a tax break than cheap cars. A tax break of 10% can yield $100 for a cheap car and $1000 for an expensive car.

Second, SUVs are considered trucks not passengers vehicles per se. So as someone said, the break is for farmers who may buy a pickup truck or heavy equipment for work. Its also for church groups that buy a 18-seat van to haul people to volunteer sites or whatever.

As for placing blame, point your finger to everyone in DC. Bush continues to make sure his oil friends are taken care of. Clinton killed government funding to the Detroit automakers ear-marked to find an alternative fuel solution.

The automakers did a great job keeping this economy running after 9/11 by encouraging people to buy cars. But they also have to make money and make a much larger percentage of profit from an SUV than an economy car.

As for my mom, she's trading her Navigator in for a smaller SUV -- still an SUV but not as much of a gas guzzler. Believe me, I'm working on her.
 
i don't mind that farmers can get a break on buying these large suvs to haul stuff. not only do most live on or below the poverty line, they also use suvs for carrying things and driving on rocky roads. for all intents and purposes, the suv was created for someone like a farmer.

i do have reservations about a church getting a tax break on one, if not only because they already get tax breaks on everything else (and people in churches have exploited this sometimes, but not all churches and not all people) and also they could spend their money better buying a van (are vans included in this? i don't remember).

but it pisses me off that someone who, for example, runs an insurance company or owns a gas station can exploit this loophole. for example, that guy in deep's article doesn't need a ford excursion. too many people already own these cars that do not fit in a space (especially when they insist on backing in to show off and park all crooked but refuse to straighten it out) and i get sick of driving in my compact car (or even my mom's wagon) and seeing a spot near the door, getting all excited, only to see i can't fit because someone in a hummer or excursion is double parked.

so in essence, i have no problem with the tax break, really. i just want this loophole to be closed so people will stop exploiting it. this money that's being wasted on the exploiters could be better spent elsewhere, since our economy is supposedly doing so poorly. perhaps putting these millions (or billions?) to improving schools, or even giving everyone an equal tax break?
 
hmm...interesting we're having this discussion now. the wall st. journal ran a story today about car companies quietly curbing their sales of SUVs. PM me if you want a copy [the site is subscription based and I have one]
 
I want to know how we decide what kind of vehicle we all need? If we take this kind of logic, then I and most all of us here, are fit for a motorbike or a 2 door tin can. We are all only one person, unless we have a twin attached to us.

Forget the fact that some of us do obscene amounts of driving, or towing or camping or haul frequently. Forget the fact that small cars will not meet these needs. Oh yeah, people in the cities cannot possibly have a need for such a ridiculously large vehicle.

Really, apologies for sounding so pissy here, but the anti SUV attitude in here is really something. You'd think people who drive such vehicles are criminals. There is a point to be made in the fuel issue for sure, but does anyone really have an idea of how many owners of such cars actually require them? I'd say a lot. Forget the wankers who get around in brand new 4WD's just to look like the tools they are. There's a damn lot more who want safety, or have an absolutely genuine need for one.
 
*swallows angela's remark.

i believe i fall into that category. point taken, and noted.
 
Great points Angie. :)

I drive an SUV and I'm not evil. I only fill up with gas every 2 weeks and I drive an average of 2 miles per day so I don't think I'm huge contributor to air pollution and our dependency on fossil fuel. Its not obscenely large and I hate feeling like I have to say I'm sorry for my choice of vehicle.

And I would still be driving my tiny little fuel efficient 85 Honda Civic except an 87 year old woman ran a red light and hit me at 50 miles per hour in her big ass Buick and totaled it. I've been a little leary about tiny cars since then and like the safe feeling I have in my SUV.
 
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