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Hey American Tax Payer – Thanks For The Range Rover!

I drive a Range Rover – the third one I have owned.  Range Rovers are terrific vehicles; luxurious yet tough when the road gets challenging.  They are also incredibly expensive.  It’s easy to pay $80,000 to $100,000 – depending on the model.  So expensive, in fact, that I would not buy one if the United States were not willing to subsidize it. That’s right – we hear a lot about tax breaks for the rich, and here’s a great one, the Range Rover Deduction.  Here is how Range Rover promotes it on their site:

 A great addition with greater deductions:
ANNOUNCING 100% TAX DEPRECIATION ON
SELECT LAND ROVER AND RANGE ROVER MODELS.

The botttom line here; since a Range Rover is so heavy, it the world of bizarro tax code it technically qualifies as a piece of farm machinery.  If you buy it as a business, you can depreciate 100% of the vehicle right away, so that $80,000 SUV “after-tax” is priced a lot closer to the competition.

I can’t help but wonder how this deduction helps America? Range Rover is owned by an Indian company.  If there were not such a terrific tax incentive to buy a Range Rover, I might be compelled to buy one of the new American SUV’s that look so good right now; perhaps a decked-out Jeep or Ford Explorer.  I also wonder if it is advisable to incentivize the purchase of really heavy vehicles that get terrible gas mileage?

But in America where we honor the rich, the people have chosen to help me buy the most luxurious SUV available. And many Americans who could never afford to buy a Range Rover are happy to fight to the death my right to get huge tax incentives to live large! Repealing the Range Rover deduction could be construed as a tax increase, which would upset “job creators” like me, and if I had to drive a Jeep I might not be as motivated to help get the American economy moving.

If you want to see a lot of beautiful Range Rovers, I would suggest visiting private airports where people with private jets house their aircraft. If you think the Range Rover deduction is extreme, wait until I tell you about the private jet tax deduction!

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3 Responses to Hey American Tax Payer – Thanks For The Range Rover!

  1. K. Austin says:

    I love reading your blogs. Most Americans are not in the upper income range and have no clue on how the tax code favors the more wealthy. Thank you so much for pointing this out. I’m looking forward to reading more about the private jet tax deduction.

  2. Ray Link says:

    While I am not defending the tax depreciation on corporate aircraft it should be noted that the rules on accelerated tax depreciation came into effect as a stimulus post 911 to help bolster sales of aircraft when the industry was in free-fall. The law had a positive impact as the industry did in fact recover. The tax depreciation effectively allows companies that use the planes for business to tax significantly larger tax deductions in the earlier years which reduces near term taxable income. However, doing so decreases the tax deductions in later years which increase taxable income so it is just a timing change on when tax is paid. The company pays the same amount of total tax over the depreciable period. President Obama wants to extend the depreciation from 5 years to 7 years and to eliminate the so-called bonus depreciation that allows an even higher up-front deduction (that is offset by lower deductions in the out years). Hopefully if this change is approved it will not have the undesired outcome of decreasing corporate aircraft sales as most of these companies are US based including Boeing, Cessna, and Gulfstream and we could in fact lose more high-paying manufacturing jobs.
    A side note on the depreciation deduction allowed on heavy SUVs – the vehicle must be used at least 50% of the time for qualified business purposes so don’t get the idea that every soccer-mom in a Range Rover is bilking the system.

    Ray Link – CPA

  3. Bizzy Life Author Avatar Tim O'Leary says:

    Valid points, but it still seems a bit like corporate welfare and hand-outs to rich guys. If the jet companies can only exist when their customers get huge accelerated tax treatment, perhaps their business model is flawed (plus – many of the hottest current corporate jets come from Brazil and other foreign producers). And if we take this to the next level, perhaps we should give allow rich people to depreciate Rolex watches, custom-made suits, and other luxury items to spur the manufacturing of these goods.

    Speaking from the perspective of someone that enjoys great tax treatment on my Range Rover and my airplane, I still think that there is a better way to progress the economy then to continue to give preferential tax treatment to a tiny percentage of the population. I would not want to live in a country based on a lower and lower-middle class primarily employed to build goods and serve the wealthy. As the French and British discovered long ago – and many emerging markets are finding now – that is not a sustainable society – and it’s a good way for rich people to get their heads cut off.

    Instead, I would love us to think large and smart…. use tax incentives to build a strong middle class that designs and manufactures state-of-the-art technologies, solutions for our impending cliimate crisis, medical equipment, and other cutting-edge products that make for a healthy economy and population. That seems to make more sense than providing incentives to buy a car manufactured in England by a company based in India.

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