Tax deductions granted by the federal government to small-business owners and the self-employed provide an incentive to purchase oversize, gas-guzzling vehicles like a General Motors Hummer, rather than small, more fuel-efficient cars like the hybrid Toyota Prius. An eligible buyer of a 2003 Hummer H2 could deduct $34,912 of the base price of the vehicle, for a tax savings of up to $13,500 for those in the highest tax bracket. Because part of the tax code governing the deductions was written in the 1980s, when deductions for car purchases were capped at no more than $7,660, buyers of cars get a far worse deal than those purchasing light trucks and SUVs. Environmentalists are outraged by the biased tax breaks and want them ended, saying they make no sense in the face of growing concern about U.S. dependence on foreign oil.
