According to Jeff Plungis of the Detroit News
, a tax loophole that small business owners have used to finance the purchase of large SUVs is about to grow significantly.
Plungis says under a major tax package going through Congress, a deduction for small business equipment purchases -- now capped at $25,000 -- is set to go up to as much as $100,000.
Plungi further said the business equipment deduction was included in a $350 billion tax-cut plan the Senate passed May 15. The small-business provision has President Bush's blessing, virtually assuring that the tax break would become law.
According to the paper, a growing number of small businesses are using the new equipment write-off to purchase luxury SUVs at a deep discount. Under current law, a small business owner can deduct $30,000 or more of an SUV purchase by combining equipment and accelerated depreciation breaks in the tax code.
According to Plungis, President Bush proposed increasing the equipment deduction to $75,000 in January. The House proposed raising the deduction to $100,000. The Senate initially offered $75,000. An amendment to increase the amount to $100,000 passed Thursday -- but only for the next five years.
The final details of the small business deduction will be finalized in House-Senate negotiations over the next few weeks, says the paper.
The Detroit News
and Plungis further said that in the House plan, for the first time, large corporations would receive some benefit. Large companies could deduct 50 percent of their equipment purchases.
Plungis said, the small-business benefits are estimated to cost between $23 billion and $39 billion, according to the Joint Committee on Taxation.
Efforts by Sen. Barbara Boxer, D-Calif., to close the "SUV loophole" have foundered. Seven senators, all Democrats, co-sponsored the Boxer bill. In the House, 22 Democrats backed a similar bill by Rep. Anna Eshoo, D-Calif.