Senate Tax Bill Blows Open $100,000 Loophole for Largest SUV Gas Guzzlers

Six-Figure Subsidies for Hummer, Range Rover and 36 Other Luxury 'Big Rigs' Will Cost Taxpayers Billions, Boost U.S. Dependence on Middle East Oil

WASHINGTON, DC (May 16, 2003) -- The controversial tax loophole for buyers of the largest, least efficient SUVs would be quadrupled to $100,000 per vehicle under tax legislation passed by the U.S. Senate last night, effectively subsidizing the full purchase price for 38 of the largest and most costly SUV models on the American road, including the Hummer, the Range Rover and the Cadillac Escalade.

At the very same time, lawmakers at work on the new energy bill are threatening to eliminate a successful $2,000 tax deduction for fuel-efficient gas-electric hybrid vehicles.

The specially expanded SUV deduction will cost taxpayers billions, according to the congressional Joint Tax Committee. It applies only to vehicles over 6,000 lbs, which excludes luxury or hybrid cars, as well as most ordinary pickups and SUVs. The law allows business owners to deduct the cost of a new, large-size SUV in just one year -- up to $100,000 -- capitalizing on a provision intended for farmers, contractors and other buyers of working trucks, not the owners of well-heeled luxury vehicles.

"Forget zero-percent financing. This is a six-figure loophole big enough for a Hummer. And that's just what every American taxpayer will be footing the bill for if this measure becomes law," said Dan Lashof of NRDC (Natural Resources Defense Council).

Efforts to close the SUV loophole while preserving small business deductions for full-size pick-ups, vans, and other working trucks were lost in the late-night rush to pass the sweeping tax bill. But Congress has one more chance to put things right when the lawmakers sit down to hammer out differences between the House and Senate tax bills before sending the final package to the White House.

"It is an unfair subsidy for select buyers of the biggest, most expensive SUVs," Lashof said. "The Senate bill makes us more dependent on Middle East oil at the very time we should be kicking the petroleum addiction."

The Natural Resources Defense Council is a national, non-profit organization of scientists, lawyers and environmental specialists dedicated to protecting public health and the environment. Founded in 1970, NRDC has more than 550,000 members nationwide, served from offices in New York, Washington, Los Angeles and San Francisco.

Related NRDC Pages
Break the Chain: End Our Dependence on Oil
The Bush Record: Clean Vehicles