Interested in a $7,000 tax credit while improving your golf game? Or maybe having the tax payers cover the cost for your child's vehicle to drive around campus.
I mentioned the benefits of understanding the ins and outs of the new healthcare regulations for your medical practice. The same holds true for the stimulus programs and your own tax return. Remember, most of the verbiage in these regulations is put to paper by junior staffers who are more concerned about the legalese in the language than the far reaching implications; the unintended consequences.
I took a few days out of the rat race to relax in my favorite beach town outside of Charleston, S.C. One of the benefits of going back to the same sleepy beach town each year is that changes come about slowly. My favorite bar still serves cold drinks. My secret café has the best brunch. And I know where to park for easy access to the least populated spot on the beach. This year was different. There were changes.
The number of fancy, tricked-out, golf carts on the roads had tripled! Everywhere you turned, someone was driving by in a new golf cart. Some were six-seaters with loud stereos and leather seats. At a cocktail party with good friends who own a beach house there, I found the answer. The carts were paid for with tax credits.
The most popular model was a four-seater with a $7,500 price tag. Each of the new owners explained that that model qualified for a $7,000 tax credit. Ergo, the net cost was $500. One local entrepreneur was said to have bought ten to resell for a profit. I was amazed that the manufacturers had not flooded the airways with promotions for the "tax free" carts. They probably were afraid public outcry would kill the golden goose.
Now, as I mentioned earlier, I thought this was probably a loophole in the law. Like back in the 1980's when a Rolls Royce automobile qualified for a ten percent investment tax credit because it weighed as much as a dump truck. There is a $15,000 credit for buying an electric van for your business, but golf carts–come on.
Sure enough, if you check the IRS website, there is a tax credit for electric vehicles. Not just by class, but a separate and unique credit for each make and model which qualify. No error here, just stupidity.
If they, the government, would have told me I could have a new street ready electric car to ride around town for my errands or for my wife's commute to work, I would have jumped on it like a duck on a June bug. Instead of wrestling with the cost benefit analysis of a $60,000 hybrid, I could have been zooming around town in my new electric ragtop thumbing my nose at the gas stations.
And that's where my major distrust of the government is born. If this was such a good idea, why were we not informed? I'm sure the lobbyist and the congressman who represent the districts where the golf cart manufacturers operate were very aware of the change in the tax law. Were they too concerned about the porcine characteristics of the credit to make it public knowledge?
Whether it's healthcare reform or an effort to develop a "Green Economy," I get on a rant when it's tax payer money, yours and mine, that is being thrown at the problem. Fifty golf carts buzzing up and down the beach carrying overweight sunbathers, who should be walking to improve their health, is not a step in the right direction. The bottom line—never confuse activity with progress.
Bill Morris is a healthcare financial advisor and management consultant. Comments & questions may be sent to firstname.lastname@example.org