If I heard the tax proposal correctly, the only deductions on personal income tax will be for mortgages and charitable donations. That would eliminate a very significant tax deduction for those who use their 911s for business and lease their cars.

 

He will never get his tax plan through. Anyway if you use your car for a business purpose I'm sure that portion of the use will be deductible, although in Canada we are limited to a maximum value for a car which is lower than the cost of a Porsche

 

Yeah all his stuff has to go through congress, so doubt a lot of it will be implemented.

 

Not certain if you understand how the US system works, but the Speaker of the Hose stated today that "Reconciliation" will be used for the tax plan. This means that only 51 and not 60 votes will be required to pass the tax plan in the Senate. So if they get all the Republicans to vote for the plan, it will pass. I'm not suggesting that it will be easy but 51 is a lot easier than 60. The current proposal allows for only two deductions which I listed above. The elimination of deductions is offered to offset the lower rates. Actually the deduction which will be missed by residents of the high tax States will be the elimination of the deduction for State and local taxes. That will of course affect a lot more people than the loss of the lease deduction.

 

The tax proposal was a one-pager! Nothing meaningful in that.

Vehicle expenses are deducted against business income, not personal income. With that said, I don't think any specifics about business deductions were mentioned. The only thing was lowering the tax rate to 15%. So the answer is need more info.

 

That may be true but I also understand that they can't use the reconciliation rule requires that the deficits don't extend beyond 10 years and the analysts say that the only way that would happen with this proposal is if the tax cut is limited to 2 years and the consensus is that such a short tax break would do nothing to help spur business investment, as business thinks much longer term when making significant investments leading to job creation - which is what Trump is trying to sell.

 

I never leased a car, so I'm not at all familiar with the deductions you get when leasing. When you own the car however, you are allowed to depreciate the asset on your personal income tax if it is used at least 60% for business. So are you stating that for leases, the deduction can be only recognized by those who own the business? I was under the impression that those who leased cars could deduct a percentage of their lease rates on their personal income tax, and that the deduction wasn't restricted to only those who owned the business. Learn something new each day.

 

I believe that Reconciliation can only be used when the proposal is revenue neutral. So the proposal sponsors have to prove that the tax revenue remains the same, notwithstanding the tax reduction i.e., increased revenue because of GDP growth. If you recall that is what Reagan did.

 

Kind of a good news bad news project. If this tax proposal should get through congress it would pretty much explode the budget and lead to a severe economic decline. When the economy declines these cars suddenly get easier to obtain (assuming you have structured your business to withstand the downturn). But it's hard to drive a GT3 around town when people out of jobs are throwing molotov cocktails at you. Like I said, good news bad news.

 

The proposed plan is to reduce itemized deductions which are personal deductions claimed on Sch. A. The plan does not call for the elimination of business deductions such as business leases which are claimed on Sch. C or Sch. E.

 

I agree. I live in northern MD, and there are areas in Baltimore city where I would never drive my Porsche, unless I were suicidal. It's amazing how peoples attitudes have changed in my lifetime. My parents were far from wealthy, but we never resented wealthy people. On the other hand we were not bombarded on a daily basis with tirades against the rich.

 

Again, too early to know the details, but I assumed the same in that the lease is written off as a business expense, not personal. The only difference is you're not incentivized as much given the lower rates. I'm not an accountant btw lol.

Also in regards to the other comment that some cars may be easier to obtain, I also think maybe that's true about "regular cars" but the GT market will be worse than ever with the top earners making more. Let's see.

 

The proposed tax decreases will benefit business and personal returns.

The IRS regulations have had a limit on how much of a lease payment (or depreciation) can be deducted each year. That rule goes back 19 years.

 

The limit applies to depreciation on purchased vehicles, not lease expenses. There is a small leased auto income inclusion but it's nominal compared to the depreciation limitations, hence one of the business benefits of leasing vs. buying.

 

Apparently the simplication of the tax code would b a great thing...