[saymaListserv] More anti-environBush to call about

Kit Potter listener at bellsouth.net
Sat Jan 25 22:55:14 JEST 2003

Bush Proposal May Cut Tax on S.U.V.'s for Business 
January 21, 2003 
DETROIT, Jan. 20 - The Bush administration's economic plan 
would increase by 50 percent or more the deductions that 
small-business owners can take right away on the biggest 
sport utility vehicles and pickups. 
The plan would mean small businesses could immediately 
deduct the entire price of S.U.V.'s like the Hummer H2, the 
Lincoln Navigator and the Toyota Land Cruiser, even if the 
vehicles were loaded with every available option. Or 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. 
Tax experts and environmentalists say the plan would 
provide incentives for businesses to choose the biggest 
gas-guzzling trucks because it takes several years to 
depreciate the cost of passenger cars and smaller sport 
utility vehicles. The ramifications of the Bush plan on 
S.U.V. buyers were reported today in The Detroit News. 
The potential lift for sales of big S.U.V.'s comes amid 
rising tension in the Middle East and increasing criticism 
of S.U.V.'s from environmentalists and regulators. 
But a top budget official said today that the 
administration might be open to changes in the tax code 
that would bring cars more in line with big trucks. 
"We have an open mind about whether the deduction for cars 
needs to be refined," said Dr. John Graham, the 
administrator of the Office of Information and Regulatory 
Affairs in the Office of Management and Budget. 
The tax code now caps deductions for most automobiles. But 
the largest vehicles - those that weigh more than 6,000 
pounds fully loaded - are exempt because the relevant 
portion of the code was written in the 1980's, before the 
rise of the sport utility vehicle, and was intended to 
exempt big pickups needed on work sites. Now the tax 
incentives also give business owners not involved in 
hauling - doctors, real estate agents, accountants - more 
incentive to buy the biggest S.U.V.'s instead of smaller 
ones, or cars. 
The proposal "makes a glitch in the tax code much worse and 
it benefits rich businessmen who want to buy massive 
S.U.V.'s," said Aileen Roder, program director for 
Taxpayers for Common Sense. "In essence we're buying these 
vehicles for these businesses." 
But the administration says that greater business 
deductions will be a potent economic stimulant. 
"Many small businesses have genuine needs for large vans, 
pickups and S.U.V.'s, whether it be for a farm, sales or 
industrial application," Dr. Graham said. "An updated tax 
deduction for small businesses is certainly needed." 
Consider the Hummer H1 as an example of the new deduction. 
It is one of the largest and most expensive S.U.V.'s, with 
a base sticker price of $102,581, including destination 
charge. Under the Bush plan, small-business owners could 
use all of an annual $75,000 capital equipment deduction 
toward the purchase; the current equipment deduction 
allowance is just $25,000. 
That is in addition to thousands of dollars in other 
deductions. Under existing rules, a business could deduct 
30 percent from the base price left after the capital 
equipment deduction, a benefit put in place as part of a 
post-Sept. 11 stimulus package. In the case of the H1, that 
would be a further deduction of $8,274. 
Finally, 20 percent could be deducted from what is left, 
part of the business deductions available for automobiles. 
For the H1, that would be $3,861 more in deductions. 
The total would be more than $87,000 in deductions, or 
about $33,500 in savings in federal taxes alone for buyers 
in the highest bracket. Under current rules, just less than 
$60,000 could be deducted. 
Deals for cars and small sport utility vehicles are much 
less appealing. Currently, a business can deduct no more 
than $7,660 for a car in its first year of service, $4,900 
in the second year and less in the succeeding years. The 
Toyota Prius, which uses a fuel-efficient blend of gasoline 
and electric power, is eligible for an additional $2,000 
clean vehicle deduction. That means a business owner could 
deduct under half of the $20,500 sticker price of the Prius 
in the first year of purchase, for about $3,700 worth of 
federal tax savings for those in the highest tax bracket. 
David Friedman, an engineer and analyst at the Union of 
Concerned Scientists, an environmental group, said the 
increased deduction for big vehicles was "yet another 
loophole that the government is keeping open that is 
increasing our oil dependence." 
"Before, it was large enough to drive a small S.U.V. 
through," he added. "Now it's large enough to drive a 
Hummer through." 
Without altering the treatment of cars in the tax code, the 
Bush plan could run counter to the administration's recent 
decision to force automakers to improve the fuel economy of 
S.U.V.'s, pickups and minivans by 7 percent by middecade. 
That is probably why the administration is open minded when 
it comes to reviewing the tax treatment of different kinds 
of vehicles. 
Dr. Graham reiterated today that the administration was 
also considering further fuel economy measures. S.U.V.'s 
and pickups that weigh more than 8,500 pounds fully loaded 
have been exempt from federal fuel regulations. But the 
administration "is currently investigating whether those 
rules should be extended to larger light trucks" weighing 
as much as 10,000 pounds, he said. 

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