While John McCain rants about how the new Cash for Clunkers program is going to bankrupt his children and grandchildren, it might be interesting to recall that under the Bush administration, there was another kind of cash for clunkers program available. It was, of course, a subsidy for the rich to buy the most inefficient vehicles possible...
Here's an article describing how the subsidy was reduced from $100,000 a vehicle, to a mere $25,000.
Hummer tax break gets hammered
Under the Jobs and Growth Act of 2003, Congress raised the deduction ceiling for these heavy-class vehicles from $25,000 to $100,000, bumped the "bonus deduction" from 30 percent to 50 percent, and left in place the accelerated five-year depreciation schedule. This, in effect, made virtually all three-ton, business-use SUVs fully deductible in the first year. More than 50 vehicles qualified for the tax break.
The article explains how this subsidy was reduced. Sort of.
Will the lower expense ceiling stop the heavy-metal stampede? Not likely, says Ronnie Windham, a certified public accountant in Oxford, Miss.
"I don't think it's going to affect people's buying habits. Most people buying SUVs are paying $40,000 or $50,000, so by the time you take the 50 percent bonus deduction and the $25,000 depreciation expense, most of them are still going to write off the full amount."
Windham notes that SUVs also enjoy what is called a maker's depreciation. "There's no dollar limit on the amount you take off each year, it's just based on what the vehicle cost. It actually takes you about six years to fully write off a five-year vehicle," he says.
Cars and light trucks, by contrast, are considered listed property. The maximum 2004 depreciation you can take on a new vehicle, no matter how much you paid for it, is $10,610. Because depreciation limits drop considerably over subsequent years, a $30,000 car will take a decade to fully depreciate.
SUV buyers might legitimately hail: "The tax break is dead; long live the tax break!"
"I guess if you have a $90,000 Hummer, it probably hurts you a little bit," Windham allows. "But if you have a $90,000 Hummer, you're probably not worried about it."
I don't know how Congress voted on this matter, but I'd be curious if John McCain was all for government largesse then. If anybody has access to that information, it would be nice to get it out there. Let's remind Republicans that they're all for government assistance when it's not aimed at the poor and lower middle classes.
Update:
From commenter gooners: McCain, Snowe, and Chafee only Republicans to vote Nay. Vote was tied, Cheney cast the decider.
According to TooFolkGR, the 25K subsidy is still in place! Seems like the perfect opportunity to make an adjustment...