The tax break for trucks over 6,000 pounds is a FEDERAL tax break, not just for California. It allows any vehicle used more than 50% for business to be deducted as a business expense in the year purchased, not depreiciated over the usual 5-7 year period.
It was originally designed for trucks (delivery, construction etc.) and was justified as a break for small businesses. A case can be made for the idea, even if you don't support it.
Anyway, as always happens, people came up with a loophole. If SUV's (which as you noted are classified as trucks) could be made larger than 6,000 pounds, and business owners (including lawyers, doctors, etc.) drove them for their businesses (more than 50% of the time, wink, wink), they could get a huge, immediate tax write off.
Therefore, this has morphed into a huge unjustified tax break for the upper middle class and wealthy. Furthermore, it compounds this problem by encouraging the bad energy/environmental policy of building and buying unnecessarily large personal vehicles.
And if you think this is strictly the unintended consequence of a debatably good idea, think again. As part of one of Bush's tax cuts (not sure which one), the maximum dollar amount of this exemption was raised from $25k to $100k. This was well after the rich started exploiting this loophole. Just another tax giveaway to the wealthy, one that was not well publisized.
The tax break for trucks over 6,000 pounds is a FEDERAL tax break, not just for California. It allows any vehicle used more than 50% for business to be deducted as a business expense in the year purchased, not depreiciated over the usual 5-7 year period.
It was originally designed for trucks (delivery, construction etc.) and was justified as a break for small businesses. A case can be made for the idea, even if you don't support it.
Anyway, as always happens, people came up with a loophole. If SUV's (which as you noted are classified as trucks) could be made larger than 6,000 pounds, and business owners (including lawyers, doctors, etc.) drove them for their businesses (more than 50% of the time, wink, wink), they could get a huge, immediate tax write off.
Therefore, this has morphed into a huge unjustified tax break for the upper middle class and wealthy. Furthermore, it compounds this problem by encouraging the bad energy/environmental policy of building and buying unnecessarily large personal vehicles.
And if you think this is strictly the unintended consequence of a debatably good idea, think again. As part of one of Bush's tax cuts (not sure which one), the maximum dollar amount of this exemption was raised from $25k to $100k. This was well after the rich started exploiting this loophole. Just another tax giveaway to the wealthy, one that was not well publisized.
Posted by Common Knowledge | Link to this comment | 08- 6-04 4:21 PM