Tax Guru-Ker$tetter Letter
Thursday, January 15, 2004
Avoid Premature Reaction
With the constantly changing tax environment, it is important to distinguish between what are actual real life changes in the laws and what are just proposals. I've never done a scientific study of this; but my guesstimate is that there are at least 100 tax change proposals for each one that makes its way into actual law. Changing your behavior based on the proposed changes can be very counter-productive.
What also happens is that people, including many tax pros, hear about the proposed changes and go around spreading them as if they were true; as in this letter I received today.
I am in Baghdad, Iraq until March and have the opportunity to buy a vehicle for my business at a reduced cost (one perk to being activated) while I am here. I read that the Senate voted to reduce the SUV tax break from $100,000 back to $25,000. Is this true? If so, will that affect the 2004 deduction of $100,000? It may be a factor on whether or not I purchase a large vehicle.
I guess it's good that you're able to think about tax matters while in the battle zone. I don't know if I would be able to even consider taxes while in such a dangerous situation.
The rule limiting the Section 179 deduction for vehicles to just $25,000 did receive a lot of publicity; much more than it deserved. I never worried about it actually becoming law; so I didn't spend a lot of time discussing it at the time.
As I had expected, that provision never got beyond the one Senate committee that passed it. It never reached the full Senate, any part of the House, or the President. The net effect is that restriction on deducting the cost of heavy vehicles is still nothing more than a wet dream for environmental wackos like Arianna Huffington and other busy-body hypocrites who want to tell the rest of us what kind of vehicles we can buy and drive.
I hope this helps resolve any confusion and lets you better plan your purchases.