[Rhodes22-list] More news from todays NY Times

Bill Berner bberner@optonline.net
Tue, 21 Jan 2003 13:29:18 -0500


In an unrelated, but equally interesting article (to me anyway) was
another Business Page piece about an administration proposal that
effectively cuts taxes on the biggest, most fuel INefficient SUV's
purchased by businesses. 

 

Here's the Cliff Notes 

 

Currently a business can write off capital equipment purchases,
including trucks, of up to 25,000 in a single year.  Cars however are
limited to a max of 7,660 in the first year and 4,900 in the next.

 

Vehicles over 6,000 pounds (trucks, including SUV's) are exempt from the
caps on deductions cars are subject to.  The code was written in the
80's before SUV become so common.  The idea was to exempt big pickups
and other light trucks needed on work sites.  

 

Under the administration proposal the amount would be raised to
75,000.00.

 

The resulting math:

 

A business owner, doctor, lawyer, whatever, buys himself a Toyota Prius.
Very environmentally responsible.  Hybrid gas/electric with 40-50 mpg,
20,500 base price.  He or she gets a tax deduction 9,660 between all of
the various breaks, but none for capital equipment.  In the 38.6%
bracket (the highest) that business owner will save 3,729 in federal
taxes.

 

Another self employed professional, prefers instead to buy a Hummer H-1
(base price 102,581, mileage ??).  This king of the road will be able to
take a deduction of 87,135.00, resulting in a tax saving of 33,634.00.
Under the current law the deduction would be 59,135, for a savings of
22.826.

 

I will spare you all my conclusions.

 

 

 

 

Bill Berner

191 South Broadway

Hastings on Hudson, NY  10706

 

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