Carmakers support SUV deductions - Duh;Senate wants to reduce small-business break- Duh

WASHINGTON October 12, 2003; Dee-Ann Durbin writing for the AP reported that the effort in the Senate to cut tax deductions for small businesses that buy sport-utility vehicles is running into opposition from automakers, who say the deductions are fair and should be expanded.

The Senate Finance Committee quietly voted this month to cut the amount small businesses can deduct for buying an SUV from $100,000 to $25,000. The bill is headed for the full Senate, where some lawmakers have called for a complete repeal of the deduction.

The deduction applies only to vehicles that are 6,000 pounds or more.

Eron Shosteck, a spokesman for the Alliance of Automobile Manufacturers, said Friday that instead of making the deduction smaller, Congress should expand it to all types of vehicles. As it is, he said, the deduction is unfair.

"The net effect is it ends up discriminating against small-business people who would use a sedan to conduct their business rather than something larger," he said.

But Taxpayers for Common Sense, an independent watchdog group that opposes wasteful government spending, says closing the loophole would generate $1.3 billion in revenue over 10 years.

"While this Hummer of a tax break needs to be run over and killed, shrinking it is a good first step," said Keith Ashdown, the group's vice president of policy.

Tax deductions for trucks and SUVs first appeared in the mid-1990s and were meant for farmers and other small businesses that needed large vehicles. At the beginning of this year the amount of the deduction was $25,000, but it grew to $100,000 this summer as part of an economic stimulus package.