'Super' SUV [Hummer-H1] Tax Break Could Reach $75,000.00-Fuel Economy Alert!

Detroit Auto News Insider ^ | January 21, 2003 SGT | Jeff Plungis

[ewing]

Presdient George W. Bush's economic growth plan could triple the size of a little known tax loophole that some small business owners are using to finance purchases of large SUV's.

One of President Bushs proposed tax cuts would raise from $25,000.00 to $75.000.00 the amount small business owners can write off when buying an SUV for business purposes.

Since the SUV loophole was first reported by the Detroit News last month, several consumer groups and lawmakers have raised concerns about the fairness of the provision.

[templar]

Well, that's a good enough reason to me to chuck the system and go to a flat tax or sales tax. Or, better yet, just take the tax burden then divide it by the population and send everyone a bill:)

How would that change anything? Tax all businesses on their total gross, not on the profit made? So a flat tax on a business making 1 or 2 percent over costs would be taxed at a rate of 30 or so percent of their gross resulting in a loss of 28 percent? Only the rich and stupid could operate a business that way (and they wouldn't be both for long).

A flat tax would only apply to profits after costs of doing business. Vehicles, equipment, supplies, etc. are a part of the cost of doing business. A flat tax would change nothing, just make it a tiny bit easier to calculate the final total due.

Sending everyone a bill for their yearly share and making them pay it might be a nice step toward fiscal responsibility though.

[Balding_Eagle]

Don't make me pay for it as a person who isn't in that category though.

I don't disagree with the idea that this is a bad tax deduction, government picking winners and losers when it should just stay out of all of it, etc.

However, your last statement can only be true if you believe all income belongs to the government first, and only after the government has taken what it wants, then to those who have earned it.

[biblewonk]

Detroit must absolutely love this little loophole. They are probably financing it today.

[biblewonk]

removed the CORPORATE deduction for CEO pay over 1 million dollars

Thanks, that's what I was trying to remember. I was also amazed when I heard of this little trick. That was when I realized that you can buy any law you want in this country.

[isthisnickcool]

A flat tax would only apply to profits after costs of doing business

Sure. No other way. Unless you say let's just do away with all personal and corporate taxes and go to a national sales tax. In the meantime I'd agree that corps. should not pay taxes anyway:)

[templar]

But basically, subsidizing almost the entire amount of luxury vehicles is a joke

This is a misleading statement. Either you have misstated you position or misunderstand what a tax deduction is. What is 'subsidized' is the amount of tax that would have been paid as income tax on the differential between the higher priced and lower priced vehicle, not the entire cost (price) of the vehicle. This is far less than the price of the vehicle. And it basically is just steering people toward buying something for one type of deduction (that benefits the SUV industry and it's employees) instead of another. You realy don't think that people with businesses this successful are going to just declare the money as income instead of shifting it to other tax deductibles, do you (Like new buildings or a larger home office, benefitting construction; new production equipment and tools, benefitting China; An extra employee that benefits the individual hired (but carries lots of liability with it); Medical or other insurance, benefitting the insurance industry and recipients, etc?)

And one could always lease vehicles for faster write offs (last time I checked, anyway. been a few years and things may have changed).

[templar]

Detroit must absolutely love this little loophole.

If I were an auto worker, I would. Keeping me employed, you know.

[isthisnickcool]

Detroit must absolutely love this little loophole. They are probably financing it today.

I sent the link to my friend that owns the Hummer dealership. His response was that it was good information and they had not seen this. And "thank you". You can bet that his sales manager and sales people will be using this information today.

BTW, this guy has 2 planes! Just pathetic, eh?

[Axenolith]

Yea, but how is it a "trick"? Remember when Ben and Jerry's had such a hard time finding a CEO? 30X the lowest guys salary just wasn't drumming up much in the way of the talent pool.

Obviously a CEO is an expense, and should be deductable, at least on the income statement. They usually get paid to produce a return on investment or increase in stock price. The shareholders vote on it, and as far as anyone else is concerned they should MTOB and butt out.

The "fairness" and entitlement mentality is rampant and sickening. My wife is controller for a small private company, and she's always amazed at the indignation of some of the other employees over what the owner "pays" himself. Like sheesh, they should be thankful they have a stinkin' job but they act like he should be grateful they work for him... (and he's pretty damn generous at that).

[Sgt_Schultze]

War on "Hummers" ??????!!!!!

Not if Billy Jeff has anything to say about it!

[isthisnickcool]

My wife is controller for a small private company, and she's always amazed at the indignation of some of the other employees over what the owner "pays" himself. Like sheesh, they should be thankful they have a stinkin' job but they act like he should be grateful they work for him... (and he's pretty damn generous at that).

I KNEW they were saying that behind my back! :)

Seriously, we should make starting and maintaining a business the most simple and easy thing a person can do. Take Hong Kong for example, you can literally have a new business up and running in no time. But not in the states.

This is one thing the Commiecrats (my grandfathers term) never even speak about. They are so focused on race but they never consider that the US tax system is racist when it comes to minorities easily starting and maintaining businesses. It's too difficult for some people, including minorities, to bootstrap and run a business due to the cost of maintaining all the gov't garbage. So, the tax system is racist racist racist! And anyone that does not agree with that is racist too! (end using Dem. technique for saying something is racist here).

[biblewonk]

If I were an auto worker, I would. Keeping me employed, you know.

I'm an airline contractor worker but I don't throw out all of my reason on efficiency and small gmt for a pay check. There is a government program that will be paying my bills and I still refer to it as a "fleecing of america" program.

[biblewonk]

BTW, this guy has 2 planes! Just pathetic, eh?

"live big", "you only go around once", "he who dies with the most toys wins".

[On the Road to Serfdom]

You are NOT paying for it. The truck can only legally be used for business. It is a business expense. It should be fully deducted as a cost of the business. Your saying they should cut costs and make a bigger profit so they pay more taxes. You have no basis on which to complain.

[rolling_stone]

Umm just one comment, when the vehicle or other business equipment is eventually sold be sure you know what the tax ramifications are. If you take the expense deduction and later sell the vehicle you may be subject to tax on the sale. Also what portion of the vehicle is used for business and what portion for personal use?

The idea is an incentive to get business people to buy larger items now by offering an accelerated expense but the government will get much of it back in taxes later when the equipment is sold, it is basically accelerating the allowable depreciation/expense deduction to one year instead of many.

It is not a free lunch, but a discount on the lunch. Maybe one of the accountants here can spell it out.

[biblewonk]

Obviously a CEO is an expense, and should be deductable, at least on the income statement. They usually get paid to produce a return on investment or increase in stock price. The shareholders vote on it, and as far as anyone else is concerned they should MTOB and butt out.

I agree that a good CEO is going to cost more than an engineer and be worth is. The Retired GE guy transformed GE from a 5ish billion dollar corp to 100ish billion. I also agree that the NFL or GE has the right to pay their people as much as they want. But, and I might not be seeing this right, to go to the gmt and get a tax loophole based on how much you compensate a ceo or a QB is just a paid for tax loophole. I'm not too excited about that.

[Plutarch]

List of eligible vehicles here (is quite extensive, a lot more than just Hummers):

Eligible vehicles

Please note it is not the "Curb Weight" that needs to be 6000 lbs., it is the Gross Vehicle Weight Rating (GVWR). That rating is found on a sticker on the inside of the door.

[fight_truth_decay]

The Dems in Hollywood have HUMV's as do alot of Sports Celebs. The "H2" is around 53 grand with extras...owned by Ford (no wonder Ford said it looked like a good year!)

[fight_truth_decay]

Be the day I will pay "monthly" for XM...cd's and all the radio channels I get now are just fine with me. The stock was high on anticipation of XM ($24)..after it, strayed down at a couple of bucks for a high.

[fight_truth_decay]

When you are in that price range of a vehicle like a HumV..cash is the way most go, you don't ask for financing. I figure if you can't afford to pay for it you can't afford to own it...no matter what the tax break. That's what's wrong with our society here in the US, people feel they need the "image" to make them appear successful...If you can afford it, go for it. You earned it!!!Pay Cash!