Congress Misfires on SUV Loophole

Summary

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Special Tax Benefits Available for Motor Vehicle Purchasers. Tax Treatment of Equipment Purchased for Use in a Business. Limitations on Tax Benefits Claimed with Respect to Automobiles. Then Congress Created the SUV Tax Break. Evaluation of Congressional Action. Conclusion.

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Congress Misfires on SUV Loophole

Professor Andrew D. Pike is Associate Dean for Academic Affairs and Professor of Law at American University's Washington College of Law. Prior to his academic career, he served as Associate Tax Legislative Counsel in the Office of Tax Policy of the United States Department of the Treasury. He has been a consultant to the Internal Revenue Service, the Congressional Joint Committee on Taxation and the Congressional Research Service. In addition, Professor Pike has provided assistance to several of the republics of the former Soviet Union concerning the reform of the tax laws and the systems of tax administration in these countries. Professor Pike received his academic degrees from the University of Pennsylvania Law School and Swarthmore College.

THE INTERNAL REVENUE CODE (IRC) provides special tax treatment for purchasers of gas-guzzling, jumbo Sports Utility Vehicles (SUVs). Congress had the opportunity to remedy this situation when it considered tax legislation in 2004, but it did not do so. Instead, it enacted a limited measure that retains excessive, (albeit reduced) tax benefits for the affluent few who feel the need to acquire a Hummer-class vehicle. Why would Congress create an incentive that is limited to ...

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