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Hummer tax break gets hammered -- Page
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By Jay
MacDonald • Bankrate.com
Cars and light trucks, by contrast, are considered
listed property. The maximum 2004 depreciation you can take on a
new vehicle, no matter how much you paid for it, is $10,610. Because
depreciation limits drop considerably over subsequent years, a $30,000
car will take a decade to fully depreciate.
SUV buyers might legitimately hail: "The tax
break is dead; long live the tax break!"
"I guess if you have a $90,000 Hummer, it probably
hurts you a little bit," Windham allows. "But if you have
a $90,000 Hummer, you're probably not worried about it."
A limited victory
Keith Ashdown, vice president of policy for Taxpayers for
Common Sense, called the move a good first step toward correcting
an ongoing tax inequity.
"We thought it was a huge victory for taxpayers.
It will save hundreds of millions of dollars and end the inequity
that biased small business owners to buy sport utility vehicles
over anything else," he says.
But Ashdown admits that the battle to correct inequities
in the tax treatment of business vehicles is far from over.
"One of our issues is, we have to stop taxing
vehicles based on their gross vehicle weight, and instead base
it on what they are used for," he says. "If you're a
passenger vehicle, you should not get a break for hauling hogs.
However, if you are a passenger vehicle and you're doing something
specific for your business, it should be considered a legitimate
business expense for tax purposes."
Then there's the issue of that lengthy depreciation
schedule for passenger vehicles and light trucks to consider.
"The 10-year depreciation cycle of automobiles
is too long. Seven years is still too long. Because nobody keeps
their vehicles that long anymore. Depreciation has to be based
on the real life of the car. We need to shorten that," he
says.
But for now, Ashdown and his watchdogs are content
with having delivered a blow to the fat cats.
"We feel all vehicles should be treated the
same. We're still not doing that because SUVs still can get $25,000
under the small truck provisions for farmers and other small businesses,
but it's a good step toward leveling the playing field."
Jay MacDonald is a contributing
editor based in Mississippi
-- Posted: Feb. 15, 2005
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