Bush Breaks For SUVs!

News Update (6/6/03):

Unfortunately, President Bush's tax loophole for giant SUV buyers has now passed Congress, allowing small businesses to deduct up to $100,000 for purchasing the heaviest, most fuel-inefficient vehicles available. Taking the actions recommended below may not sway this Administration, but with enough pressure and shaming, policies can be changed. Meanwhile, at the local level, Oregon has sought to restore the tax; consider urging your state congressional representatives to do likewise.

Call today to close SUV Business Tax Loophole

President Bush wants to enlarge an already engorged tax loophole for business owners' giant SUVs. The tax deduction a good idea for farmers and other business people who need pick-up trucks and vans—has been a boondoggle for lawyers, doctors, accountants and the like who are applying the generous tax break to purchase their oversized SUVs. And who, need we ask, gets the bill. . .we, the people. The group "Taxpayers for Common Sense" estimates that the SUV tax loophole costs government between $840 million and $987 million for every 100,000 vehicles sold to business. By increasing the size of the tax deduction, the Bush administration's economic plan would cost government still more in lost revenues. At the same time, California's Senator Boxer notes, "by allowing oversized SUVs to get the same deductions as trucks and vans, the tax code is discouraging the purchase of more fuel-efficient vehicles." To close this loophole, leaving the tax deduction in place for those farmers and business people who actually need it, Senator Boxer has introduced important legislation, "The SUV Business Tax Loophole Closure Act."

TAKE ACTION TODAY

URGE your Senators to support The Boxer "SUV Business Tax Loophole Closure Act" Call the Capital switchboard, 202/244-3121, to be connected to your Senator, or check the web site, www.senate.gov, to get all their contact information.

If you choose to write a letter, here's some suggested language:

Dear Senator [insert your Senator's name here]
I live and work in [insert your state], care about the environment and who gets tax breaks and why. I believe it is right for farmers and other business people who truly need pick-ups and vans weighing over 6000 pounds to deduct their vehicles as a business expense. But it is not right to provide this same deduction to lawyers, doctors or accountants who drive huge SUVs, hauling little more than a brief case or maybe their kids to a ball game. Now President Bush wants to increase the tax break for vehicles of this size, allowing small businesses to deduct the entire price, and costing the government still more in lost revenues.

I frankly don't get it and urge you please to support California Senator Boxer's "SUV Business Tax Loophole Closure Act." The Boxer bill is reasonable. It preserves the tax break for farmers and business owners who need large vehicles for their work, while placing the purchase of SUVs under the same tax deduction cap placed on cars. As Senator Boxer points out, her bill will not only return important tax dollars to government's coffers, but removes a big incentive to purchase gas-guzzling SUVs. Please support her and this effort to put some sense into our tax system.

Yours truly,

[your name]

LEARN MORE

Karl Wizinsky, a health care consultant in Michigan, bought a $47,000 Ford Excursion earlier this year and was able to write off $32,000 of the purchase price as a business expense. He wasn't thinking about buying a new car until he heard about a boondoggle deduction available to small business owners for vehicles weighing more than 6000 pounds. Wizinsky told California's Senator Barbara Boxer "We really did it (bought the SUV) because it is a pretty hefty deduction."

To encourage small business growth over the years, Congress has created a number of mechanisms for small business owners and the self employed to be able to deduct immediately a variety of capital expenses, the purchase of work vehicles for example. The tax code now caps deductions for most automobiles, but to help farmers and small business owners that need pick-up trucks or vans for work, Congress in the 1980s excluded from the car cap the largest vehicles—those that weigh more than 6,000 pounds fully loaded. The problem today is that this particular tax break, which was written into the tax codes before the rise of the luxury sport utility vehicle, has pushed up demand among business owners not involved in hauling work—doctors, real estate agents, accountants—for the biggest SUVs instead of smaller ones, or cars, at huge cost to taxpayers.

The Bush Administration wants to provide an even bigger break to small business buyers of giant SUVs. The Bush administration's economic plan would increase by 50 percent or more the deductions small-business owners can take right away on the biggest sport utility vehicles and pickups. The plan would mean small businesses could deduct the entire price of SUVs, such as the Hummer H2, the Lincoln Navigator and the Toyota Land Cruiser, even if the vehicles were loaded with every available luxury option. This would mean a business owner, taking full advantage, could buy a BMW X5 sport utility vehicle for a few hundred dollars more than a Pontiac Bonneville sedan after the immediate tax deductions were factored in.

To fix this problem, Senator Boxer in late January 2003 introduced the "SUV Business Tax Loophole Closure Act" placing the purchases of SUVs weighing more than 6,000 pounds under the same tax deduction cap placed on the purchase of cars. The bill would not affect business purchases of trucks or vans. In order to ensure that farmers and small business owners can still get the tax credit to purchase trucks for hauling or vans for transporting products, Senator Boxer's bill has carved out SUVs very carefully. The definition specifically allows the deduction for any vehicle which: 1) does not have the primary load carrying device or container attached; 2) has a seating capacity of more than 12 persons; 3) is designed for more than 9 persons in seating rearward of the driver's seat; 4) is equipped with an open cargo area (for example a pick-up truck or box bed) of 72.0 inches in interior length or more; or 5) has an integral enclosure, fully enclosing the driver compartment and load carrying device and having no body section protruding more than 30 inches ahead of the leading edge of the windshield. That definition should allow for legitimate deductions for the purchase of vehicles that small businesses and farmers need including pick-up trucks and cargo vans.

REFERENCES:

Boxer Bill Would End Abuse of Tax Loophole For Oversized SUVs boxer.senate.gov/newsroom/200301/20030130_enrg.html

Bush Proposal May Cut Tax on SUVs for Business Danny Hakim, New York Times Tuesday, January 21, 2003

Two Senators Seek Controls on Gas-guzzling SUVs San Francisco Chronicle Thursday, January 30, 2003