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Politics : The Environmentalist Thread -- Ignore unavailable to you. Want to Upgrade?

To: American Spirit who wrote (4830)	4/24/2005 11:29:12 AM
From: Ron	Read Replies (2) \| Respond to of 36921

SUV owners get free gas -- courtesy of Uncle Sam Owners of gas-guzzling SUVs and other heavy vehicles who use them entirely for business can get Uncle Sam to pay for four or more years of fuel costs -- in the form of tax breaks. It's hard to think of a worse formula for wrecking the country. By Scott Burns How would you like the U.S. government to send you a check that would pay for five years' worth of gasoline? Well, it can be arranged. Not everyone is eligible, of course. But if you use a vehicle 100% for business and purchase it, new or used, from a select list of big-time gas-guzzlers, Uncle Sam is ready to help you out. Yes, I'm talking about the well-publicized special tax break for vehicles with a gross weight of at least 6,000 pounds. Gross weight is the weight of the vehicle including fuel, passengers and payload. Because of this, gross weight can be a good deal more than the empty weight of the vehicle. Forty-one domestic and 15 foreign SUVs qualify for this tax break. The Porsche Cayenne, a notably business-like vehicle, is among them. As a consequence, while the depreciation write-off for any passenger car used for business is limited to only $2,960 in 2005, down from $10,610 in 2004, those claiming 100% business use of these SUVs could deduct 100% of the $89,665 price of the Porsche Cayenne Turbo during 2003 and until late October 2004. For those who bought in time, the write-off represented an immediate income tax savings of $31,383, provided the buyer was in the 35% tax bracket. Think of it as a bagatelle for the non-indigent from the Jobs and Growth Act of 2003. One of the particularly compelling uses I've seen of this tax break was a bright parrot-green Hummer2 parked at a luxury marina in Burnt Store, Fla. A sign on the driver's door advertised a dress shop. Banks and insurers check your credit. So should you. Tightened, not closed, loophole Many readers will note (some with sorrow) that this tax break brought so much well-deserved excoriation to legislators that they closed it. "Tightened" would be a better description. If you failed to buy your Porsche Cayenne Turbo by last October, don't despair. Uncle Sam still wants to help. The American Jobs Creation Act of 2004 reduced the immediate deduction to $25,000. In addition, you can take normal depreciation on the remaining value. Normal depreciation is 20%. That would be about $13,000 for the Cayenne Turbo. So your total tax deduction would be $38,000. For those in the 35% tax bracket, that calculates to an immediate tax savings of $13,300. Can you say 'counterproductive'? That, of course is mere money. Suppose we measure the benefit in something of global importance, like gasoline. According to the U.S. Department of Energy's Fuel Economy Web site, the Cayenne Turbo gets 13 mpg in the city, 18 mpg on the highway. It has an estimated annual fuel cost of $2,241, assuming a premium fuel price of $2.24 a gallon. Divide the immediate income-tax savings by the annual cost of gasoline and you get the answer: Uncle Sam will pay for 14 years of gasoline, if you bought under the Jobs and Growth Act of 2003, or 5.9 years, if you bought under the American Jobs Creation Act of 2004. The table below shows the approximate years of fuel Uncle Sam paid for business guzzler buyers under both sets of rules. This assumes a typical annual gasoline cost of $2,000 and a 35% tax bracket buyer. The lowest subsidy covers over four years of gasoline. It suggests that we should have a spelling bee for legislators to determine how many can spell "counterproductive." Tax savings for guzzler buyers reduce government revenue, increase the federal deficit, increase our trade deficit, and send yet more money to the Middle East. If we were going to devise a formula for wrecking the country, it would be difficult to improve on this one. We might as well call this portion of the American Jobs Creation Act of 2004 the Osama Bin Laden Support Fund. moneycentral.msn.com -- Let us remember that the feds are essentially penalizing the folks who do not drive these gas guzzlers. Because every tax dodge for a special group is made up by all of the folks who do not participate in the dodge. Have a nice day.