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Experts call out worrying provisions in US tax code that are skewing vehicle purchases: 'Western carmakers might come to regret this'

There isn't evidence to attribute the growth in SUV sales to tax law alone, but it probably played some type of role.

There isn't evidence to attribute the growth in SUV sales to tax law alone, but it probably played some type of role.

Photo Credit: iStock

The Inflation Reduction Act has helped Americans save thousands of dollars on more planet-friendly technologies, but an expert is calling out provisions in the U.S. tax code that incentivize highly polluting modes of transportation. 

As GreenBiz detailed, language in Section 168(k) of the Internal Revenue Code allows bonus depreciation for "qualified property" such as private jets. 

Tax changes under the Trump administration in 2017 increased the "allowances and benefits associated with purchasing a private jet" from 50% to 100% under the Tax Cuts and Jobs Act.

While these benefits are being phased out, the report notes that these changes "were noted to greatly increase the sale of private jets." 

Rich celebrities typically receive a lot of attention for their use of private aircraft, as the online platform pointed out. However, the business jet market is an oft-overlooked sector dominated by North Americans. Polaris Market Research estimates it will surpass $40 billion in value by 2030, as reported by GreenBiz. 

Considering that "private jets are five to 14 times more polluting than commercial planes (per passenger) and 50 times more polluting than trains," according to Transport & Environment, the market leads to a disproportionate amount of harmful pollution.

Meanwhile, Section 179 incentivizes the purchase of gas-guzzling SUVs and trucks, both of which release more carbon dioxide than cars with traditional combustion engines.

According to the International Energy Agency, electric vehicles have continued to grow in popularity, but so too have SUVs, which "consume around 20% more oil than an average medium-size non-SUV car." 

Overall, non-electric SUVs release more than 1 billion tons of carbon pollution worldwide — a troubling figure considering that the World Health Organization found that 99% of people are breathing air that poses a threat to their health

That also may be bad for our bottom lines in the long term.

"Carmakers are culling small cars in pursuit of profit," Transport & Environment senior director for vehicles and e-mobility Julia Poliscanova told CNN last year. "... For drivers, this means more expensive models and higher running costs, especially at a time of high energy prices. Ultimately, Western carmakers might come to regret this."

As GreenBiz noted, there isn't evidence to attribute SUV sales growth to tax law alone, but the outlet speculated that it probably played some type of role.

"As the effects of the 2017 Tax Cuts and Jobs Act gradually diminish, especially in the lead-up to the 2024 presidential election, it will be interesting to see if changes are implemented should former President Donald Trump be reelected," GreenBiz wrote

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