The Law Of Intended Consequences
by Vince?Daliessio
Along with the usual "environmentalist*" rhetoric floating around about them, I have heard a lot of class-warfare rhetoric expended around SUVs, particularly "heavy" SUVs (which, at 6,000 lb gross weight is simply an SUV based on a full-size pickup truck chassis). These "heavy" SUVs, by virtue of their 6,000 pound-plus GVWR (Gross Vehicle Weight Rating), are defined by the Feds as light trucks, which qualifies them for special tax treatment, claimed By the Bush Administration to be intended to help small businesses. And, typically for a Misesian libertarian, I pooh-poohed the rhetoric. "Sour grapes!" was my usual response, and it still is, to a point. But this article on www.selfemployedweb.com about Bush's?light-truck deductability rules both cheered and dismayed me.
The new rules, passed with the 2003 "tax cut", do two things for owners of trucks over 6,000 lb GVWR, including "heavy" SUVs. First, the new rules increased the maximum deductible purchase price?of a?qualifying vehicle?from $25,000 to $100,000, a fourfold increase. Second, it allowed the entire deduction to be taken in the year of purchase, instead of depreciated over 3 to 5 years as was the case previously.
This is good news for a small contractor like my father, who would like to replace the aging small trucks that he uses in the conduct of his business. Before, he was limited to buying a newer (he has almost never been able to afford to buy new) truck every 3 to 5 years, as he was able to save up the money. With accelerated depreciation, as well as a higher threshold, he will be able to cut his costs overall by replacing trucks before they need seriously expensive work done on them. That's good for him and his business, which employs 6 workers.
But look at how else one might benefit. Let's say that to make one's vehicle expenses business-related, one builds an office in one's home. Now all the business use (including what used to be disallowed as "commuting") is deductible. One doesn't even have to prove "business necessity" for?a "heavy" SUV (indeed, most of these never see dirt at all, much less construction sites) - the deductibility to the higher limit is simply based on the gross vehicle weight, and the definition of anything over that weight as a light truck. This special deductibility is granted to Excursions, Yukons, and Hummers, but not to 5- and 7-series BMW sedans, for instance.
I'm all for people being allowed to keep as much of their earnings as possible. But this change benefits two relatively affluent groups - "heavy" SUV-buying small businessmen and auto manufacturers - at everyone elses expense. So I have to say it's wrong. A more honest deduction would be limited to pickups, dump trucks,vans, flatbeds, stake-bodies, box vans, and tool vans actually used out of necessity, not Lincoln Navigators for the wives and girlfriends of "small businessmen".
Here, a federal definition confers uneven benefits upon those smart enough to play legal games with their tax return. It should be repealed, along with the federal income tax, and the federal government should stop asserting such destructive?control over all of us.
(* I put "environmentalist" in quotes because having worked for my entire career in the environmental business, I recognize that most people who call themselves?"environmentalists" are completely unqualified to tell others how to properly behave toward the environment.)
