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Discussion Starter · #1 ·
SUV sales climb on tax loophole
By Jim Hopkins, USA TODAY
SAN FRANCISCO — A tax loophole big enough to drive a $90,000 sport-utility vehicle through is working magic on SUV sales.

Small-business owners are swamping dealers with orders for Porsche Cayennes, Cadillac Escalades and other pricey SUVs as Congress tries to close the loophole driving such sales.
Dealers sold more than 101,000 full-size and luxury SUVs last month — a 51% jump from a year ago in what's usually a slow month, says researcher Power Information Network. Figures aren't kept on the number sold to businesses.
Many sales were spurred by a small-business tax benefit in the $350 billion tax cut that President Bush signed last May, dealers say. Before the cut, many vehicles weren't eligible for a business tax deduction.
Business owners such as Dean Parker in Mobile, Ala., discovered the benefit applied to SUVs weighing more than 6,000 pounds. Parker, who owns a paging service, spent $108,000 on a Cayenne and a Hummer H2 in June. He uses them for sales and service calls. Tax savings: $37,800.
The benefit raised to $100,000, from $25,000, the amount small firms can write off annually for investments in machinery and other big-ticket items. The increase was meant to spark business investment and job growth. But critics, including Sen. Don Nickles, R-Okla., say it's a costly giveaway that's ripe for abuse. Nickles is on the Finance Committee, which failed in an attempt to slash the benefit in November.
A tax bill awaiting action in the Senate seeks a cut again. A vote could come later this month or in March. Bush, amid pressure to trim the federal deficit, kept the benefit in his 2005 budget proposal last week. Whatever the outcome, it has become a gold mine for:
•Buyers. Bob Marra and his fiancée plan to buy a $57,000 Escalade for their real estate and publishing companies near Palm Springs, Calif., in the next two weeks. Tax savings, after an allowance for personal use: $17,556.
Melody Warren, CEO of Transportation Logistics Systems, bought a Lexus GX 470 for $48,000 on Dec. 27, racing to close the deal by year's end so she could get a 2003 write-off. She'll use it for sales calls at the freight management company in Kansas City, Mo.
Dealers sold nearly 164,000 luxury SUVs in December, a 22% jump from 2002, says Power Information.
•Sellers. Hendrick Porsche in Charlotte sold six Cayennes in January and December, priced at up to $90,000 each, to business owners taking advantage of the benefit. That was a quarter of all the Porsches sold in the period, says new car manager Ed Keady. "Six Porsches anytime is fairly significant," he says.



So what should they do about this tax loophole? As a soon-to-be-small business I see the need. But there is ample room for abuse IMO.
 

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I think they should close it, but not specifically for the environment. It's being abused, period, and that is why they should do something about it.
 

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The benefit was originally established for farmers to ease the burden of buying farm equipment. I say close the loophole by excluding anyone *but* farmers from using it.
-Nick
 

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Re: (PacerX)

I don't really see the problem. I should open a boat-towing business aimed at precisely....ME.

Hmmm....Silverado SS at invoice is $34,000.....a 15 grand tax break would net me a $20,000 truck. maybe I should be looking into this closer.....


Modified by mtrainVR6 at 5:06 PM 2/13/2004
 

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Re: (mtrainVR6)

I've personally seen several pizza delivery places, limo services, and small businesses that tow or carry absolutely nothing racking up on Touregs, Escalades, Cayenne, etc. due to this rule. It come out to be cheaper than buying the midsize pickup they actually need.
 

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Re: (Whirling_Dervish)

Touaregs sell a ton due to this tax cut...trust me, half of the ones I sell are because of it.
 

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Re: (LittleBlackGTI)

Quote, originally posted by LittleBlackGTI »
I *HATE* George Bush

Bush has nothing to do with it...FYI.
Close the loophole and make the wording of the tax law specifically state WHICH businesses can recieve these tax breaks.
 

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Re: (vw86gti)

And I *HATE* the liberal soccer moms who buy these damn things to transport their only child to and from the Doctor for their Ritalin and counseling sessions.
Yeah, I have issues. What's your point.
 

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Re: (DRGSR)

Quote, originally posted by DRGSR »
And I *HATE* the liberal soccer moms who buy these damn things to transport their only child to and from the Doctor for their Ritalin and counseling sessions.
Yeah, I have issues. What's your point.

because only liberals have kids and drive suv's right? give me a break.
 

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Re: (DRGSR)

This is interesting. While we don't have anything quite like it in Australia, we have a carry over thing on 4x4/SUVs as well. Decades ago, the import tariff on SUVs was set at 5% (vs current level of 15% on passenger cars) to make it easier for farmers to buy them.
Now we have people buying X5s over a 5 series and Merc MLs everywhere as you get so much more car for your money. With our new FTA with America, it will make the X5 and ML even cheaper as they are imported from the US. Time to lower the tariff on normal cars is what I think.
 

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Re: (vw86gti)

Quote, originally posted by vw86gti »

Bush has nothing to do with it...FYI.

Quote, originally posted by Jim Hopkins, USA TODAY »
Bush, amid pressure to trim the federal deficit, kept the benefit in his 2005 budget proposal last week.

A half-trillion dollar defecit, and we're giving out $20,000 bonuses to people who buy Cayennes.


Modified by cjb at 3:52 PM 2-13-2004
 

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I never knew this loop existed, but I now realize I know people who I'm assuming have benefitted from it.
 

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Re: (rawk)

Quote, originally posted by rawk »

because only liberals have kids and drive suv's right? give me a break.

Relax. I dislike all SUVs and see no point to them unless you live in the frozen Tundra of Canada, eh.
 

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Re: So THIS is what is driving UBER-SUV sales (Whirling_Dervish)

boy, does no one pay attention to the news? this was brought up about, oh, summer of '03.
but let's not forget, you have to be TAXED enough to deduct the expense. how many of us are taxed $30,000? unless i'm way off, and it wouldn't be surprising, i hate our tax system.
 

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Re: (PacerX)

keep the loophole, its good that business owners get a good tax break that will allow themselves to personally profit
 
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