President Signs Corporate Tax Bill, SUV Tax Deduction Reduced
With no fanfare, President Bush on Friday signed the most sweeping rewrite of corporate tax law in nearly two decades, which included $136 billion in new tax breaks on businesses, farmers and other groups.
Among scores of provisions included in the bill, the legislation includes a reduction in the existing incentive to purchase business-use SUVs. The so-called SUV loophole had allowed small business owners to deduct up to $100,000 off the purchase of business-use sport-utility vehicles over 6,000 pounds. Enactment of the corporate tax law reduces the deduction to $25,000, which became effective with the President’s signature. Legally auto dealers will no longer be allowed to offer or advertise the $100,000 tax deduction.
The bill was seen as must-pass legislation because it repeals a $5 billion annual subsidy for U.S. exporters that has been ruled illegal by the World Trade Organization. Because of that ruling, 1,600 American exports to Europe have been hit by penalty tariffs that now stand at 12 percent and are rising by 1 percentage point a month.
NADA members seeking more information about the effects of this change may access a summary of the tax law changes affecting SUVs at:http://www.nada.org//Template.cfm?Section=20044&Template=/MembersOnly.cfm&ContentID=12815.
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