No More Luxury Tax: Starting in 2003

[YellowSnake]

On August 20, the Small Business Job Protection Act was signed by President Clinton. This news is noteworthy if you're currently earning minimum wage, or if you’re in the market for a new luxury car.

That's right, sports fans, a new luxury car now costs less. The current luxury-car-tax cutoff price is $34,000; anything in excess of that amount becomes heavily taxable spending. For years, the government has been adding an extra 10% tax for all the extra fun you're having. But on August 28, that 10% slipped down to 9%. And every new year starting with 1997, another percentage point will drop from the tax. The phase-down is to be completed by the end of the year 2002.

How did this happen? On July 31, The House and Senate agreed to terms on H.R. 3448, `An Act to provide tax relief for small businesses, to protect jobs, to create opportunities, to increase...' etc. For new car buyers, the importance of this bill is in the Senate's amendment Section 1604, entitled "EXTENSION AND PHASEDOWN OF LUXURY PASSENGER AUTOMOBILE TAX."

If you've been weighing the plusses and minuses of buying a luxury car, count another plus. You'll now pay less than that guy down the block who just bought his BMW 5-Series in early August. Otherwise, you could wait until early in the year 2003, when the automobile luxury tax will just be a faint memory.
http://edmund.com/edweb/anderson/luxury.html

 

[MiamiJeff]

Great reason to try to put off that SRT delivery a few months!

Dealers generally know the rules but today my local tag agency tried to charge me state sales tax not just on my new Viper but on the luxury tax too. Wrong! Luckily I caught this and educated them.

 

[slaughterj]

Now they need to get rid of that d*mned gas guzzler tax?!

 

[C O D Y]

Do we pay sales and lux tax on the Gas Guzzler tax?

 

[Mike Brunton]

Cody,

Yes, you pay sales and luxury tax on the gas guzzler tax. The gas guzzler tax is assessed by the government to the vehicle manufacturer. They just itemize it out on the window sticker to make the price of the car look less. The price the dealer pays on the car is inclusive of the gas guzzler tax, so your sale price includes this amount, hence you pay any other tax on that money too.

 

[C O D Y]

Thanks Mike.

 

[Snakester]

I think that gas guzzler tax is rediculous for sports/exotic cars.

Sports/exotic cars are generally driven MUCH less than conventional cars, and sold in MUCH fewer numbers. So the total gas use for these cars would only amount to a tiny fraction of overall gas consumption nationwide.

The automobile manufacturers obviously sold millions of Americans on buying SUVs and trucks in an effort to get around emissions and EPA fuel requirements of passenger cars.

I find it offensive that someone is charged thousands of dollars for buying a car that gets better combined mileage than many SUVs and large trucks (which have no such penalty) but are sold by the hundreds of thousands each year.

It's not that I don't like trucks, or SUVs (although I think that many are a total waste being used for commuting and 1-2 person non-business transportation.

The gas guzzler and luxury taxes are really just token efforts to LOOK like something is being done about improving economy and has no relation to actual vehicle usage, or any effect on really lowering gasoline consumption in the U.S.

I'm glad that the luxury tax will be gone soon, and I hope that the gas guzzler tax will disappear as well.

-Dean.

 

[toddt]

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by Snakester:
Sports/exotic cars are generally driven MUCH less than conventional cars, and sold in MUCH fewer numbers. So the total gas use for these cars would only amount to a tiny fraction of overall gas consumption nationwide.

The automobile manufacturers obviously sold millions of Americans on buying SUVs and trucks in an effort to get around emissions and EPA fuel requirements of passenger cars.

I find it offensive that someone is charged thousands of dollars for buying a car that gets better combined mileage than many SUVs and large trucks (which have no such penalty) but are sold by the hundreds of thousands each year.
<HR></BLOCKQUOTE>

&lt;clap clap clap clap clap&gt;

 

[Hoosier Daddy]

Guilty as charged 496 cubic inch Chevy 2500HD Vortec 8100 Crew Cab. 10 mpg max around town if I do lots of coasting!!!

 

[Snakester]

My comments weren't meant as a bash for trucks, which can of course be very useful. Just against stupid laws and taxes that are created to advance politician's careers, and make them look good, without causing any positive change or real improvement.

-Dean.