[Congressional Record Volume 149, Number 17 (Thursday, January 30, 2003)]
[Senate]
[Pages S1828-S1829]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. BOXER (for herself, Mr. Schumer, and Mrs. Clinton):
  S. 265. A bill to amend the Internal Revenue Code of 1986 to include 
sports utility vehicles in the limitation on the depreciation of 
certain luxury automobiles; to the Committee on Finance.
  Mrs. BOXER. Mr. President, today, I am introducing the ``The SUV 
Business Tax Loophole Closure Act'' along with

[[Page S1829]]

Senator Schumer and Senator Clinton to close a loophole in tax law that 
some are inappropriately using to deduct a majority of the cost of the 
largest SUVs on the market.
  To encourage small business growth, Congress has created a number of 
mechanisms for small business owners and the self-employed to be able 
to deduct a variety of capital expenses immediately. In order to keep 
people from abusing these deductions to buy passenger cars for personal 
use and call it a business expense, Congress capped the deduction for 
car purchases at $7,660 in the first year, and $4,900 in the second 
year after the purchase.
  But to help farmers and small business owners that need pick-up 
trucks or vans for business purposes, Congress excluded from the car 
cap those vehicles that weigh more than 6,000 pounds. Vehicles larger 
than 6,000 pounds are eligible for the full capital expense--$25,000. 
This tax policy was created before the advent of SUVs, many of which 
weigh more than 6,000 pounds.
  As a result, people who do not need a large vehicle for business 
purposes are buying the largest Hummer SUVs, Mercedes SUVs, BMW SUVs 
and other super-sized SUVs and deducting a significant portion of the 
cost from their taxes immediately. If they were to buy anything smaller 
than the largest of SUVs, then they would not get the larger tax 
deduction because the lower weight puts the SUV under the luxury car 
cap. This distorts the market, pushing up demand for the largest of all 
SUVs at a huge cost to the taxpayer.
  To fix this problem, my legislation places the purchases of SUVs 
weighing more than 6,000 pounds under the same tax deduction cap placed 
on the purchase of cars. That would end the market distorting incentive 
that encourages small business people such as accountants, lawyers, and 
consultants to buy a Hummer when they do not need a Hummer for business 
purposes.
  Let me give you an example. Karl Wizinsky, a health care consultant 
in Michigan, bought a $47,000 Ford Excursion earlier this year and was 
able to write off $32,000 of the purchase price as a business expense. 
He was not even thinking about buying a new car until he heard about 
the deduction. In the December 18, 2002 Detroit News article, he said 
``We really did it, bought the SUV, because it is a pretty hefty 
deduction.'' Now, a health care consultant may need to carry medical 
samples around town but he certainly does not need a 6,000 pound, 
extra-large SUV to do it and we should not be subsidizing that 
purchase. The group ``Taxpayers for Common Sense'' estimates that the 
SUV tax loophole costs government between $840 million and $987 million 
for every 100,000 SUVs over 6,000 pounds sold to business.
  I propose to fix the problem by including extra-large SUVs under the 
same deduction cap we have in place for cars. In order to ensure that 
farmers and small business owners can still get the tax credit to 
purchase trucks for hauling or vans for transporting products, I have 
carved out SUVs very carefully. The bill specifically allows the larger 
deduction for any vehicle which: No. 1. does not have the primary load 
carrying device or container attached; No. 2. has a seating capacity of 
more than 12 people; No. 3. is designed for more than 9 persons in 
seating rearward of the driver's seat; No. 4. is equipped with an open 
cargo area, for example a pick-up truck or box bed, of 72 inches in 
interior length or more; or No. 5. has an integral enclosure, fully 
enclosing the driver compartment and load carrying device and having no 
body section protruding more than 30 inches ahead of the leading edge 
of the windshield. This will allow the larger deduction to continue to 
be taken for the purchase of vehicles that small businesses and farmers 
truly need, including pick-up trucks and cargo vans.
  I know that Congress never intended for the SUV tax loophole to 
exist, and I look forward to working with my colleagues to close it.
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