Tax break has Hummers rolling off lots

The Arizona Republichttp://www.azcentral.com/news/articles/0101hummer01.html ^ | Jan. 1, 2004 | David J. Cieslak

[SierraWasp]

Once again, I fergot to ping you on my memory based "ping list!" I see you been doing a great service on this thread.

Non business folks get so "het up" when they learn that business folks have even been deducting thier office toilet paper for years and fly into a rage over how unfair it is!!!

Yet these same, usually salaried folks, have no thought of the abject terror of trying to meet a payroll during business down turns in the business cycle.

Or worse, they forget that government mandates business folks work for free to collect taxes and are even forced to hire people to do the government mandated paperwork to document the taxes due and collected, along with all the other noxious regulation paperwork!!!

[Atlas Sneezed]

Selective tax cuts are dangerous.......why not make the damn thing applicable to car insurance, gasoline taxes, phone bills, a wider swath?

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These kinds of expenses are already fully offsettable against business revenues.

People keep forgetting that this is solely about BUSINESS vehicles, not personal vehicles.

(And if that encourages more people to start businesses, I can think of worse things to encourace via the tax code.)

[NeoCaveman]

vto
Since Nov 28, 2003

(Chuckle)

[Atlas Sneezed]

it'll end up making the target vehicles more expensive for those who don't get the subsidy.

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I think not. That would apply if there were a fixed supply. But the manufacturers are happy to expand production to meet demand. And the increased volume generated by business pruchasers spreads the fixed costs of development and tooling over more vehicles, reducing manufacturing costs per vehicle. Reduced costs experienced by multiple competitors will drive prices down.

You're welcome!

[Darnright]

Hummer, Schmummer. Let's see, we have a business. We could paint the name of our company on this baby.

[Atlas Sneezed]

I wonder if this law is still in effect for 2004?

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Still in effect. The year-end rush was by those businesses who want to spend $50k on a vehicle now, and cut their tax payment this March by ~$20k. If they buy today, they don't affect the current tax bill, and receive the break only on the next year's tax bill.

[SierraWasp]

You cain't tell me FR doesn't have edukayshun value!!!

[gitmo]

Did you read and understand the article? It's a subsidy. Not a tax rollback.

How in the world does this constitute a subsidy? The articles (including post 12) indicate this is a reduction in the tax burden. I think anything that stimulates commerce in the US is good.

[Snerfling]

What this article fails to mention, and this thread only touches on briefly, is that the most effective way (no, the only way) to reduce one's taxes is to be self-employed. Of course, it can't be a sham or hobby, but must be a legitimate, profitable business.

That being said, once you get acclimated to the benefits of self-employment (and no, being a 'consultant' with one paying client is not self-employment - the IRS refers to these types of arrangements as 'statutory employment' ie your 'client' will have to cough up employer taxes, etc), it's hard ever going back. In fact, I don't know how people do it.

While it's no longer useful to take a home office deduction, cars, PCs, telco, medical, trips (the incremental cost [ie non-deductable] to take your family on a 'business trip' [sometimes as little as a few hour meeting] is nill compared to the baseline hotel costs, etc for one person), etc are direct off the top expenses.

The people you usually see driving around in nice vehicles almost always self-employed. New cars are a ridiculous waste of money if the gov't doesn't pick up 25-35% of the annual cost. For instance, my neighbors are a chiropractor/mortgage broker couple - they just bought a new H2 and monster truck for him/her because of the 10k first year write-off.

[Atlas Sneezed]

The government is forgiving taxes that the rest of us must pay to increase activity in certain sectors. The lack of foresight that allows a self-employed plumber to buy a Humvee and erase his income for the year is just the law of unintended consequences at work.

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Businesses pay taxes on their profits. (This has nothing to do with personal income taxes paid by "the rest of us".) Why should a business truck be given hostile tax treatment compared to other business equipment?

And that self-employed plumber can expense a Hummer ONLY if it is an "ordinary and necessary business expense", which it surely ain't. And even if it were, his expense is reduced by the portion of use that is personal and not business related.

[sergeantdave]

Ugh! All this tax stuff has my head spinning. And on the first day of the new year. Sec. 179 seems to be written by spacemen to torture earthlings who own businesses. Now my head hurts. Time for two fingers of scotch.

[pageonetoo]

Do it...and take the deduction! It's perfectly legal, as long as you use it "for the business". That means, you can invite a few friends (excuse me, bizness associates) over, sit in the RV, and have a couple of 'adult beverages"...

[backhoe]

watching my neighbors do the yearly "let's repair the dock" routine was a disincentive, to say the least. Then there is the fun of boat maintenance and repair...

My Dad had a 28 foot and 40 foot Chris-Craft when I was a boy, and we spent more time sanding & chipping & filling holes on the #!%^! things than we ever did on the water... probably why I've never wanted a boat unless it's some kind of work boat. Pleasure craft are too dern much work!

[tubebender]

I just talked to my sister in Fresno. They are small scale raisin growers and because some of their income in2003 was from previous reserves at the packer they were facing a big tax bill. You guessed it...they bought a new Silverado on the 29th so that some auto worker has a job.

[SierraWasp]

Hey! What goes around, comes around! Things have ways of balancing, inspite of the unrepentant "Social Engineers!"

I'll NEVER forget a meeting I attended where a bunch of government "leaders" were having a circular whatever, pretending to come up with things that would stimulate the local economy. They were about ready to name their exercise in futility a "Providers Network!"

They got SO unhappy with me when I asked them what they thought their government agencies could actually "provide" or "produce" for anyone and from what!!! Then I come here and am told I'm "obtuse!!!

[Moonman62]

I think not. That would apply if there were a fixed supply. But the manufacturers are happy to expand production to meet demand. And the increased volume generated by business pruchasers spreads the fixed costs of development and tooling over more vehicles, reducing manufacturing costs per vehicle. Reduced costs experienced by multiple competitors will drive prices down.

Why don't we have the government subsidize everything? That would really drive down prices.

[pageonetoo]

Why don't we have the government subsidize everything?

They already do, in one way or another... except for the avg middle-income 'joe'!!!

[Atlas Sneezed]

Why don't we have the government subsidize everything? That would really drive down prices.

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First, letting business offset equipment purchases against revenues to yield a taxable profit is NOT a subsiidy.

Second, you claimed: "it'll end up making the target vehicles more expensive for those who don't get the subsidy." I explained why the reverse is true.

Third, I never claimed that favorable tax treatment (or more accurately, the absence of the unusually hostile tax treatment that lighter business vehicles receive) does not raise the price of some goods. In fact, the prohibition on full deductability of most business vehicles makes them more expensive, and the natural shift to large SUVs may also make small SUVs and cars more expensive.

(Are you SURE you prefer that businesses send more earnings to the government instead of productive manufacturing companies?)

Let businesses decide what equipment to buy, and tax them (if we must) on their profits.

I strongly recommend Thomas Sowell's fine book "Basic Economics."

[snopercod]

No. I am not a book, I'm a person.

[krb]

LOL...is that your book?