An artificial demand for inefficient vehicles

According to a report from the office of Massachusetts Congressman Edward Markey, tax breaks for buyers of SUVs, trucks and minivans are costing American tax payers billions of dollars per year.

Aimed at two federal tax policies, the report includes estimates from the Joint Tax Committee of Congress stating that together these loopholes will amount to a loss of $15.7 billion in the coming decade.

The Gas Guzzler Tax, implemented by the Energy Tax Act of 1978, was meant to penalize vehicles whose fuel economy did not meet certain standards. However, the tax only applies to cars, not trucks. Markey's report uses the example of a buyer wishing to purchase an Audi station wagon which gets 20.5 mpg would pay $1,300 in gas guzzler taxes while that same buyer would not be penalized if he/she were to purchase a 15.8 mpg Jeep.

The second marked policy came along with the 2003 Tax Act. It allows a business owner to purchase a heavy SUV or truck and write off 50 to 100 percent of the cost of the vehicle on his/her income taxes the very first year. Curious as to how that works? The website will walk you through it in 3 easy steps.
  1. Pick out a suitably heavy machine. "Fortunately, it's very easy to find attractive vehicles with GVWRs above the magic 6,000-pound figure. Most machines that look big enough to qualify do qualify. Examples include the Hummer H2, the Chevy Suburban and Dodge Ram pickups."
  2. Buy it. Don't lease it.
  3. Play the home-office angle "because then all the commuting mileage from your home office to various temporary work locations will be considered business mileage."
In the wake of high gas prices and declining SUV sales, there's no doubt that it's an opportune time for critics of these tax loopholes to take action, however, Congress' next move remains to be seen.

[Source: Dow Jones MarketWatch]

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