1.This Act may be cited as the
Drivers Accelerated Interest
Deductibility Act of 2011
or the Drivers AID Act
.
2.Congress finds the following:
(1)The economic
health and well-being of the United States depends on a strong and resurgent
automotive industry. Until 2008, automotive sales historically accounted for
approximately 20 percent of all retail spending in the United States, and
provided the income and financial security for millions of Americans.
(2)From June 2006 through May 2008, the
seasonally adjusted annual rate of automotive sales ranged from a high of
approximately 17,500,000 units in June 2006 to a low of 14,200,000 units in May
2008, substantially above the 13,000,000 unit seasonally adjusted annual rate
generally regarded to be the indicator of a robust automotive industry.
(3)Beginning in June 2008 and continuing
through the present, the seasonally adjusted annual rate of automotive sales
has averaged less than 10,000,000 units and has exceeded that number in only
three months and has not in any matched or exceeded the 13,000,000 unit
seasonally adjusted annual rate threshold.
(4)The annual
contributions of the automotive new vehicle dealers industry to the national
economy are substantial. In 2008, the average sales revenue for the
approximately 20,000 new automobile dealers in the United States was
$28,800,000 and the total sales of all new-vehicle dealerships in the United
States was $576,000,000,000 which constituted 14.6 percent of total retail
sales in the United States.
(5)In 2008, the
1,057,500 persons employed in new-vehicle dealerships in the United States, an
average of 53 employees per dealership, earned on average $48,963 per year,
generating a national payroll of more than $52,000,000,000 and $2,660,000 per
dealership and millions more in tax revenue for State and local
governments.
(6)Because a well
capitalized, financially sound dealer network is essential to the success of
every automobile manufacturer, especially a manufacturer facing economic
challenges, preserving the viability of the new-vehicle dealer industry further
the national economic interest of the United States.
(7)Because sales of
new vehicles is highly dependent on consumer confidence and the existence of
incentives to motivate consumers to purchase a new-vehicle, a reduction in the
cost of capital needed to finance the purchase of a new vehicle over a period
of years will have a positive effect on the viability of the new-vehicle dealer
industry, which in turn will strengthen the automotive manufacturing industry
and the national economy.
(8)Payment of nonmortgage interest payments,
such as automobile loan debt, was deductible for Federal income tax purposes
for 73 years, from the inception of the Internal Revenue Code in 1913 until
Congress ended the deduction in 1986 when the Tax Reform Act of 1986 was
passed.
3.Deduction for interest
on indebtedness incurred to acquire a passenger car or light truck
(a)Paragraph (2) of section 163(h) of the Internal Revenue
Code of 1986 is amended by striking and
at the end of
subparagraph (E), by striking the period at the end of subparagraph (F) and
inserting , and
, and by adding at the end the following new
subparagraph:
(G)in the case of the acquisition of a
qualified vehicle, any qualified vehicle interest if, for the calendar quarter
preceding the date on which such vehicle is acquired, the average national
unemployment rate for such quarter is not less than 7
percent.
.
(b)Qualified
vehicle interestParagraph (5) of section 163(h) of the Internal
Revenue Code of 1986 is amended to read as follows:
(5)Qualified
vehicle interestFor purposes
of paragraph (2)(G) and this paragraph—
(A)The term
qualified vehicle interest means any interest which—
(i)is
properly chargeable on indebtedness incurred in acquiring a qualified vehicle,
and
(ii)is properly
allocable to the 36-month period described in subparagraph (B)(ii).
(B)
(i)The amount of interest taken into account under this
paragraph (after the application of subparagraph (A)(ii)) with respect to a
qualified vehicle shall not exceed $5,000.
(ii)Only interest on such indebtedness properly allocable
to the 36-month period beginning on the date such indebtedness is incurred may
be taken into account under this paragraph.
(C)
(i)The term
qualified vehicle means a motor vehicle—
(I)the original use of which commences with
the taxpayer,
(II)which is acquired
for use by the taxpayer and not for resale,
(III)with respect to which no payment is made
under section 1302 of the Consumer Assistance to Recycle and Save Act of
2009,
(IV)which is made by
a manufacturer,
(V)which is treated
as a motor vehicle for purposes of title II of the Clean Air Act,
(VI)which has a gross
vehicle weight rating of 6,000 pounds or less, and
(VII)which is a
passenger automobile or light truck.
(ii)The term motor
vehicle means any vehicle which is manufactured primarily for use on
public streets, roads, and highways (not including a vehicle operated
exclusively on a rail or rails) and which has at least 4 wheels.
(iii)The terms automobile, passenger
automobile, light truck, and manufacturer have
the meanings given such terms in regulations prescribed by the Administrator of
the Environmental Protection Agency for purposes of the administration of title
II of the Clean Air Act (42 U.S.C. 7521 et seq.).
(D)Average national
unemployment rateThe average
national unemployment rate for a calendar quarter means the national
unemployment rate means the average of the monthly national unemployment rates
for months in the calendar quarter, as reported by the Bureau of Labor
Statistics, Department of
Labor.
.
(c)Deduction
allowed in computing adjusted gross incomeSubsection (a) of section 62 of such Code
is amended by inserting before the last sentence the following new
paragraph:
(22)Qualified
vehicle interestThe
deduction allowed by reason of section
163(h)(2)(G).
.
(d)The amendments made by this section shall apply with respect
to vehicles acquired on or after January 1, 2011.