Archives

House bill targets $25,000 credit for trucks bought by small businesses. (http://www.detroitnews.com/apps/pbcs.dll/article?AID=/20070616/AUTO01/706160358/1148/AUTO01)

http://www.cleanmpg.com/photos/data/501/2007_Lexus_LX_470.jpgDavid Shepardson - Detroit News - June 16, 2007

Why would a small business need to own let alone be allowed a $25,000 tax credit on a $67,395 2007 Lexus LX 470 Luxury SUV with an 07 EPA fuel economy rating of just 13 city/17 highway? And to think the tax credit used to be $100,000! We are really messed up :angry:

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 … http://www.detroitnews.com/apps/pbcs.dll/article?AID=/20070616/AUTO01/706160358/1148/AUTO01

'bout flipping time......

we have a local radio station with its logo plastered all over a hummer. and he needs to carry WHAT to do business??? :mad:

Dan can testify someone at The Tennessan (article on hypermiler in Nashville (http://www.cleanmpg.com/forums/in-the-news/t-a-hypermiler-from-nashville-tennessee-4924.html)) was crying about hybrid tax credits while overlooking the tax cuts mentioned in this topic - strange how one's point of view can blind them.

Yes, I'm referring to Section 179 ( http://www.fool.com/personal-finance/taxes/2003/06/27/new-tax-breaks-for-small-businesses.aspx (http://www.fool.com/personal-finance/taxes/2003/06/27/new-tax-breaks-for-small-businesses.aspx) ) The tax break for the Prius is being phased out, and it was small comared to the break mentioned above. Add to that hybrids are 2% of the market, if even that - why are you so comfortable with the breaks on tax breaks on large business SUVs? This sounds as silly as a sports bar brawl on two players doing the same thing - it's OK on your team , but my player needs his butt suspended.


...that may be a darn good idea - just eliminate tax credits for all vehicles. My guess is overall, vehicle choices would be more fuel efficient at the end of the day.

Man, and you wonder why every hates the US government. All they do is cave in to all the, man what do they call it, lobbyists(?). Government elected officials spend millions, probably billions actually, of dollars every year for elections. Which they try to say that money doesn't matter, but who are we trying to kid here. Then they turn around and squander more money on dumb tax breaks like this. Why would a SMALL business need a car that expensive to begin with? I'm pretty sure that non-hummer truck can do they same job better, more FE, and costs less. So freakin illogical.

Ohh, and heaven forbid that we cripple the auto industry to save the planet. Yea, I'm sure after most of the human race dies that we are going to have cars as our #1 priority. "Ohh as long as the auto industry is ok we can survive through anything." :) Yea right.

God, the government is so backwards I'm not sure if they know up from down anymore. And they worry about us taking drugs. Hah, they've been on them for years. I'm sure it's for "medicinal" purposes only of course.

We had a lawyer in town who had a hummer with his law firm's name on the spare tire cover on the back. I'll bet he got that sucker for free because this was back when the tax break was 100K.

I always thought that hummer would've made a lovely bonfire.:Banane38: Didn't do it though. Darn my law-abiding sensibilities!

Dan can testify someone at The Tennessan (article on hypermiler in Nashville (http://www.cleanmpg.com/forums/in-the-news/t-a-hypermiler-from-nashville-tennessee-4924.html)) was crying about hybrid tax credits while overlooking the tax cuts mentioned in this topic - strange how one's point of view can blind them.Yep, they certainly lost their mind on that one. Put it right up there with MSN for ultimate flame-fest.

Favorite quote from the Tax Credit article.
Let's face it, the auto industry and their supporters have no credibility after three decades of baseless whining

11011011

This is not a tax credit. It is a sec 179 depreciation deduction which allows business' to deduct capital (work trucks, CNC machines, printing presses, computers, light tables, operating room equipment, etc) purchases complete cost in the same taxable year, rather than a phased depreciation deduction over the average expected life of the item. This was created to help US industry modernize and expand. True a few morons just had to buy a heaver Denali, but I think this is still a free country and they took advantage of a good tax break that helped this country pull out of the business crash after 9/11.The hybrid tax break used to be a deduction now it is a much more valuable credit. Remember these business' need the taxable income in the first place to deduct it later on in the form.

....This (179 depreciation deduction) was created to help US industry modernize and expand. True a few morons just had to buy a heaver Denali, but I think this is still a free country and they took advantage of a good tax break that helped this country pull out of the business crash after 9/11....

I appreciate the long odds a small business has of succeeding and have consistently voted pro-business the past 30 years. Just as consistently I have resented subsized bling-bling vehicles, even back to the "welfare Cadillacs" of the 1970's. Some of these business tax breaks date back ten years ago - what does that have to do with 9/11?

Using a 8000-pound SUV as a billboard does not exactly send a "lean-and-mean" business message out there.

This was created to help US industry modernize and expand.

Buying a gas-hog is not modernizing. Any tax code that acts like it is needs to be reformed.

Harry

This is not a tax credit. It is a sec 179 depreciation deduction which allows business' to deduct capital (work trucks, CNC machines, printing presses, computers, light tables, operating room equipment, etc) purchases complete cost in the same taxable year, rather than a phased depreciation deduction over the average expected life of the item. This was created to help US industry modernize and expand. True a few morons just had to buy a heaver Denali, but I think this is still a free country and they took advantage of a good tax break that helped this country pull out of the business crash after 9/11.The hybrid tax break used to be a deduction now it is a much more valuable credit. Remember these business' need the taxable income in the first place to deduct it later on in the form.True. At the 25% tax rate, a $4 deduction is worth a $1 credit. So the %100k deduction is equivocal to a $25k credit. Author of the article did botch that.

So basically buying a $50k Hummer, financed over 7 years would cost you about $10k in payments the first year and net you $12k reduction in your taxes, giving you one year (and then some) of Hummer ownership payment free. Considering that some people cycle cars every two years, the fictional hummer owner basically gets his hummers for half price.

I certainly hope that back in the hayday they couldn't re-apply for the credit every time traded in for a new hummer, but I wouldn't put it past the good 'ole IRS.

The answer to IRS is in my SIG. The sickest of all beuraucracy.

11011011

Balsam Bill, welcome to the forums (and I hope you're actually here to talk about fuel economy, and didn't just join to make that one post). You're right that this is a S.179 deduction and not a tax credit, so it's not like they're getting the vehicle for free.

But let's remember the S.179 deduction is an exception to the normal depreciation method of deducting capital expenses. Normally businesses have to spread out the tax writeoff over several years when they buy major capital equipment, since the benefits of the equipment last for years and they are usually leased or financed over a period of several years. S.179 was created to give small businesses a break, and a reduction in paperwork, by allowing them to write off the entire cost of small capital expenditures (new office equipment or machines) during the first year. Until the Bush administration the S.179 deduction was very limited, with a cutoff of $17k per year IIRC. Allowing large vehicles, which are almost always financed over 5-6 years, to write off the entire purchase in the first year is a serious distortion: you get this big tax break the first year even though you have several years of payments.