Tax bill targets buyers of SUVs

Measure seeks to deter Oregon businesses from buying big rigs

A backlash against sport utility vehicles has established a beachhead in the Oregon Legislature.

If a tax bill making its way through the legislative process in Salem is enacted as now written, a lot fewer Oregon business owners will be buying new SUVs next year. Or they'll pay a hefty penalty for the privilege.

The bill, co-sponsored by Sen. Charlie Ringo, D-Beaverton, and Rep. Jackie Dingfelder, D-Portland, would nullify at the state level a big boost in federal tax incentives for businesses to buy SUVs that was authorized last month by Congress.

The vehicles have increasingly become a lightning-rod issue for environmental groups. Among the more outspoken critics is Arianna Huffington, the gadfly national columnist, who describes them as 'gas-guzzling, pollution-spewing, downright dangerous behemoths.'

In the tax cut legislation that Congress passed and President Bush signed into law last month, the amount of business property Ñ including SUVs Ñ that businesses can claim as a business expense in a single year was raised from $24,000 to $100,000.

The increase applies to business assets placed in service for 2003, 2004 and 2005.

The Oregon bill would require businesses to report triple the amount of federal tax write-offs they claim for SUVs on their federal tax returns as income on their Oregon tax returns.

The proposed legislation would apply to larger SUVs (ones rated over 6,000 pounds, such as the Ford Expedition and the Chevy Tahoe) purchased after Dec. 31, 2003, and used for business purposes. For example, a business owner who bought a $40,000 SUV next January would have to report additional Oregon income of $120,000.

Ringo introduced the bill for both revenue-raising and environmental reasons.

'It will help reduce the money draining away from our schools by removing incentives to waste gas, and at the same time it will improve the environment,' he said.

The bill has broad bipartisan support and was unanimously passed by the House transportation and revenue committees. It was scheduled for a full House vote today, but the timing is uncertain because a full vote was delayed twice earlier this week. Similar bills have been introduced in California and New York, according to Ringo.

Darrell Fuller, a lobbyist for the Oregon Independent Automobile Dealers Association, said new-car dealers did not oppose the original legislation because they recognized the financial difficulties that the state currently faces. Originally, the bill would have required business owners to report as Oregon income only the amount of their federal tax write-off for SUV purchases.

But when the bill was amended in committee to triple the amount of income that business buyers of SUVs must report, the group objected.

It would 'penalize Oregon SUV purchasers on their Oregon tax returns for taking advantage of the federal tax code,' Fuller said.

The car dealers group planned to focus its opposition to the bill in the Senate, said Fuller, who predicted that 'it will look a lot different' when it emerges from that chamber of the Legislature.

The measure could speed up purchase decisions that otherwise might have been delayed, if businesses follow the advice of their accountants.

If Oregon business owners buy SUVs this year, they will get the full deduction at both the federal and state level, noted Bill Holmes, managing partner of Holmes Royer, a Portland certified public accounting firm. But if they delay until next year, he said, they may get penalized by three times the amount of the federal tax write-off claimed.

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