U.S. House of Representatives Cuts Business SUV Tax Deduction
Lawmakers cut — but didn't eliminate — a tax break for luxury sport utility vehicles in a tax bill that passed the House on October 8, according to a report in the Associated Press.
The bill would lower the amount small businesses can deduct for the cost of a luxury SUV from $100,000 to $25,000. It applies only to large SUVs over 6,000 pounds. Businesses would still be able to deduct the cost of pickups and other large vehicles.
Since the summer of 2003, small business owners have been able to deduct up to $100,000 of the cost of an SUV if the vehicle is used primarily for business. The measure was intended to give a jolt to the economy, but some lawmakers said it was an abuse of a law originally meant to help farmers.
On October 6, House and Senate lawmakers approved the $25,000 limit and extended it to 2007 as part of the tax reform bill. The House passed the bill with a 280-141 vote on October 7. The bill then moved to the Senate.
The American International Automobile Dealers, which represents 10,000 auto dealers, defended the $100,000 tax break as a way to generate economic growth. The group said it didn't know how many small businesses took advantage of the provision, but said SUV sales increased by 6 percent in 2003.
But others, including the consumer group Public Citizen and the watchdog group Taxpayers for Common Sense, advocate ending the tax break altogether. Taxpayers for Common Sense said government could collect $1.3 billion in revenue over 10 years without tax breaks for SUVs.