Congressman wants to close SUV tax loophole
Congressman Ed Markey (MA) has released a new report entitled Tipping the Scales to coincide with a bill titled H.R. 5579, the No Special Subsidies for Gas Guzzlers Act. The report focuses on the tax loophole that exempts people purchasing an SUV from paying a gas-guzzler tax, which is normally applied to the purchase of any vehicle returning less than 22.5 mpg. The report points out that, for instance, someone buying a 20.5 mpg Audi gets dinged by a $1,300 gas-guzzler tax, while someone purchasing a 15.8 mpg Jeep pays no extra tax. Congressman Markey's bill would also close a "loophole" that allows business owners to write off most of the cost of an SUV, but not other types of vehicles.
Fair enough. Joe Average consumers should not be exempt from a gas-guzzler tax on an SUV that will be used for soccer practice runs and towing the family boat. However, legitimate businesses that require the utility an SUV or large truck provides shouldn't be penalized, either. To close the loophole may mean that the landscaper down the street has to pay a gas-guzzler tax on a vehicle that his business requires, which is a different proposition altogether. That is, of course, unless you want to argue that no business requires a body-on-frame SUV, but we're doubting that's the case.
Markey's report estimates that the loophole will cost taxpayers $2.6 billion next year and $15.7 billion over the next decade. While the current tax law at stake here needs some attention, rather than just closing the loophole, perhaps some intelligent people should sit down and revise the law so that it doesn't encourage consumer purchasing of extra large SUVs but also doesn't penalize those business and industries that require vehicles like this.
Oh, and it would be a lot easier to take Mr. Markey's argument more seriously if someone had the caught the reference in his report to a "GMC Yukon Sierra", which technically doesn't exist. You can get a Yukon SUV or a Sierra truck, but you can't get both in one without a head-on collision.
[Source: Wired]
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Reader Comments (Page 1 of 6)
john 3:11PM (9/05/2006)
Not surprising. Liberal Democrats know very little about business and the economy. He probably thinks tax money "belongs' to the government.
Regular SUV drivers deserve tax breaks just about as much as Prius owners do.
The former should downsize and the latter should walk/bike.
I'd tax Ted Kennedy's (and Al Gore's) private jets much sooner than I' leverage a "gas guzzler" tax on regular people.
Whaddya say we leverage a federal property tax on mansions?
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Klaus Nomi 3:15PM (9/05/2006)
"GMC Yukon Sierra"! Hahaha!
Any mention of Toyotas in there?
Well, he's a lib, so he naturally turns on his own country first.
What about nuclear energy and telecommuting tax breaks? Hhah! Doesn't have that element of "social control"...
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PJ 3:18PM (9/05/2006)
The "GMC Yukon Sierra" remark, though I'm unsure of its context, doesn't have any bearing on this issue. The guy's a politician, not an auto journalist.
To me, a sensible compromise seems to be closing the loophole for SUVs, but not pickup trucks. Open-bed vehicles are far more likely to be used for their intended purpose. How many landscapers and contractors use a leather-lined Sequoia or Suburban for real work?
Today's large SUVs are marketed and sold as daily drivers, not work vehicles. Sure, some owners use them to trailer boats and other toys. That makes the SUVs a toy, too, and they should be charged the same tax as the guy in his S4.
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Jon 3:19PM (9/05/2006)
Government(democrats,who else) meddeling created the SUV craze by taxing cars that returned less than 22.5 MPG.Now they want to tax every vehicle.See how that works!More taxes!How about LIFTING the tax on cars.That's right!Lifting the tax on cars so that people can get out of SUV's and into more sizable cars that return better gas milage than SUV's.Or so manufacturers are freer to explore more car-based alternatives to SUV's.Damned socialist democrats
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ENH 3:22PM (9/05/2006)
Only someone from TAXachussets would go after someone who wants to buy a cheap Jeep. No wonder Mass is the only state in the Northeast that is loosing population.
People that buy less fuel efficient cars and trucks already pay at a higher tax rate when they buy fuel
Gas Tax is a user tax; it correlates directly to the amount of gas used. The more you buy, the more you pay.
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Leo 3:23PM (9/05/2006)
I know four people who own their own businesses and took advantage of this huge financial incentive to buy Suburbans, Expeditions and Tahoes under the business name. These people are largely in service industries and never need to pull a trailer or haul lots of stuff. Rather, they ride 30-40 miles to work alone in the comfort of their 8,000 behemoth.
The one guy I know who needs a delivery vehicle bought a van and a minivan. He drives a suburban and tows only the family boat he bought with the $25,000 government subsidy he got to buy gas hogs for his business.
An MIT economist last week said something like this... "If the Martians landed today and formed their opinion based solely on what the issues the US Congress is addressing, they'd likely conclude that the biggest problem we have in America is that wealthy people just don't make enough money."
Instead of making life better for the majority of Americans our Congress wants to worry about inheritance tax, providing corporate windfalls, flag burning gay marriage and keeping millionaires happy so they'll donate more money to campaigns.
We can only hope for some reform in November, followed by the election of someone remotely in touch with everyday concerns of real people in 2008.
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chewy 3:30PM (9/05/2006)
This guy is my hero. I have said millions of times that SUV and pickups MUST pay gas guzzler taxes. Cars with equaly bad fuel economy already pay gas guzzler taxes. Why not SUVs and pickups??????? Maybe when the EPA drafted the guidelines over 30 years ago soccer moms didn't drive in their SUV, but now they do.
http://www.fueleconomy.gov/feg/info.shtml#guzzler
This is what the EPA says the gas guzzler tax is for
The purpose of the Gas Guzzler Tax is to discourage the production and purchase of fuel inefficient vehicles
They are being the wold's biggest hypocrites by not having gas guzzler tax on SUVs and pickups.
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BOB 3:32PM (9/05/2006)
OK -- I AM GOING TO BE WATCHING FOR FIRE ARROWS HERE
1-- the comment about Liberal Democrats and not knowing business is extremely partisan -- can we please keep off that?? (BTW: the entertainment and garment industries and many small businesses are run by liberals, who can have the same selfishness as conservatives about wanting to deduct a vehicle)
2-- OF COURSE it is ridiculous for a tax break meant for business to allow Republican Joe Smith or Liberal Joe Weinstein to escape tax on his personal vehicle.
3-- OF COURSE it is EVEN MORE ridiculous that this loophole can push richer folks out of sedans into big trucks. screwing up energy and the environment worse. Let the sedans and personal trucks be on equal footing, then see what sells.
4-- OF COURSE it is specious to argue that a properly done tax revision could hurt businesses. It is pretty easy to offer reasonable proof that a vehicle has business use. (If the owner is getting away with buying SUVs for his whole family, but the deliveries really go out in a pickup, it is true that the business may be less rich if he pays up, fairly.)
5-- OF COURSE someone who understands vehicle categories well has to help write the law. The thing about Yukon and Sierra is petty: they are both large vehicles that are often purchased for personal use.
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Ryan 3:27PM (9/05/2006)
"1. Not surprising. Liberal Democrats know very little about business and the economy. He probably thinks tax money "belongs' to the government."
"2.)Well, he's a lib, so he naturally turns on his own country first."
-First off, it's a republician conrolled congress so if it passes, the majorty of republicians also agree with it. I guess we will have to wait and see.
3.)"How many landscapers and contractors use a leather-lined Sequoia or Suburban for real work?"
-That is the truth!
"3. The "GMC Yukon Sierra" remark, though I'm unsure of its context, doesn't have any bearing on this issue. The guy's a politician, not an auto journalist."
-I agree and what is even funnier (ironically) is Autoblog had to explain the difference to it's own readers, don't ya think we would have came to that conclusion on our own, being as how smart we are about cars?
THE one thing we seem to agree on is ***something*** has to be done, and what party thought of it first?
Secondly,
Congress bills are much like "concept" cars aka: shoot for the stars then come down from there. Which if your opposing party is the majority of your house, would you not do that as well?
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required 3:28PM (9/05/2006)
i doubt any business needs an SUV.. a truck maybe, but not SUVs.
and in any case, Commercial vehicles can get exemptions from the gas guzzler tax.
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Richard Warren 3:32PM (9/05/2006)
Jon, you're funny, ever get drool on your shirt from foaming at the mouth about politics?
It's a loophole, plain and simple. Easy to fix, prove the vehicle was bought for business filed as a business tax write off on the correct form using a tax resale number or employer tax ID. Done.
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BOB 3:33PM (9/05/2006)
____Only someone from TAXachussets would go after someone who wants to buy a cheap Jeep. No wonder Mass is the only state in the Northeast that is loosing population.____
COME ON -- the Jeeps that someone would compare to a big Audi are Grand Cherokees and Commanders, at $40,000 or so. AND in the gratuitous political comment, "losing" is speled as "loosing" -- as in "the Repubs are loosing the dogs of greed and corruption" --my gratuitous political comment.
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Ryan 3:34PM (9/05/2006)
"1. Not surprising. Liberal Democrats know very little about business and the economy. He probably thinks tax money "belongs' to the government."
2.)"Well, he's a lib, so he naturally turns on his own country first."
"Government(democrats,who else)"
"5. Only someone from TAXachussets would go after someone who wants to buy a cheap Jeep."
So how much did you guys save via the US Government on your last SUV purchase? You guys also like to cheat on taxes as well?
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PJ 4:06PM (9/05/2006)
Jon, it's a massive oversimplification to suggest that the gas-guzzler tax "created" the SUV. The gas-guzzler tax was introduced in 1978, at which point the Bronco, K-Blazer, Scout, Wagoneer, Land Cruiser, Jeep, and others had already been on sale for years.
There were far more factors at work, including shifting consumer tastes, domestic carmakers' need to offer something the Japanese makes didn't, and carmakers seeing an opportunity for big profits with relatively little outlay. To pin the changing winds of automotive fashion on any one factor is silly.
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Rob 3:35PM (9/05/2006)
finally something smart from our govt. but you KNOW republicans are going to shoot it down saying its "un-American" and that instead, we should be doing more to protect our "freedom" like giving a wee tax break or two to those making over a billion dollars. cause THATS what's in all of our interests, obviously...right? right? wait...
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rwdmtparkingonly 3:40PM (9/05/2006)
If anyone here is a true LIBERTARIAN then I'm sure you also support marijuana legalization and the elimination of FCC and other media content regulation. Otherwise you're just an inconsistent JACKASS.
Legitimate businesses use VANS and CHASSIS CAB PICKUPS, which this politician does NOT want to tax. Even if he did, the DCX Sprinter, which is arguably the best choice, gets 25 MPG (http://www.daimlerchrysler.com/Projects/c2c/channel/files/90475_FactSheet_Sprinter05.pdf).
A lot of professionals use gas guzzler taxed German Uber Sedans as a necessity to impress clients. They don't get a break, and this just makes the law consistent.
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beaker 3:44PM (9/05/2006)
Admittedly, the majority of business owners that need trucks will just buy pickups. But, there are those that need the capabilities of a truck and an SUV. My dad is a consultant and often works on construction sites where 4WD is a must. Due to the nature of his business, an SUV is better than a pickup for carrying people and electronic equipment. Yes, he is an exception. But, like our dear government, we should be careful of making sweeping generalizations.
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Dan 3:46PM (9/05/2006)
"Fair enough. Joe Average consumers should not be exempt from a gas-guzzler tax on an SUV that will be used for soccer practice runs and towing the family boat"
This is rediculous! There should be NO TAX on gas-guzzlers. Period! Come on people! IT'S YOUR MONEY!!! The government thinks we are "costing" them money when we don't give it to them. Does nobody out there have a problem with this?
#5 comment is right on the money (pun intended). People who buy large SUVs already pay a huge "gas guzzler tax" every time they go to the pump. Large SUVs are already overpriced as it is so adding another $1000 to the cost isn't going to change a thing.
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Kowell 3:50PM (9/05/2006)
problem with these damn loopholes is that my next door neighbour can pass off his Dodge Durango off as a "business expense"..... did I mention he and his wife run a corner street kindergarten...
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Jon 3:52PM (9/05/2006)
Warren.Obviously you don,t know who the authors of C.A.F.E. standards were,What they were meant to do and how they failed.You also seem to like to pay taxes.I don't.I believe that the market should dictate what manufacturers build.I don't think they should be herded blindly by the government (hence my poltical reference)into building SUV's because of some tax penalty on cars.Seems to me most of your judgements ,though at times more thought out than most ,are hopelessly clouded by political bias
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