Oldsmobile Dealers may get Tax Break

[Ming]

Olds car dealers may get tax break
An amendment that would give Oldsmobile dealers two years to spend General Motors settlement money tax free

By Barbara Wieland
Lansing State Journal
Source: Taxpayers for Common Sense

The impending demise of Oldsmobile might have car dealers feeling glum, but the U.S. Senate may soon lift their spirits.

An amendment to a federal tax bill would allow Oldsmobile dealers to hold onto General Motors Corp. settlement cash for two years tax free. GM is paying the dealers to compensate them for the loss of the Oldsmobile brand.

But critics of the bill say the Oldsmobile amendment, which would cost the U.S. Treasury $189 million in lost tax revenue, is just another example of legislative sweetheart deals, or pork, offered in an election year.

"Everyone is interested in bringing pork home to their district in an election year," said Aileen Roder, program director for Taxpayers for Common Sense, a Washington-based advocacy group.

In all, the tax bill, with its 264 provisions, would grant $170 billion in tax cuts over 10 years, according to an article in The Washington Post.

The tax breaks would go to Oldsmobile dealers, and the timber and film industries, among others.

Car dealers bristle at the characterization of the amendment as pork barrel.

"We did not want to go out of business," said Leo Jerome, chairman of the Story Automotive Group in Lansing, which includes Story Oldsmobile and Story University, which also sells Oldsmobiles. "This money is not a windfall. It will be reinvested in our businesses."

The amount GM pays dealers varies, but an Automotive News article said dealers could be compensated as much as $3,100 per vehicle sold in a year.

Dealers who sell only Oldsmobiles would receive more compensation.

Under current tax law, dealers would have six months to reinvest that money into their business before they must pay taxes on it. The amendment would give dealers two years before taxes are due.

"That proposal would make it easier for us," said Jeff Crippen, owner of the Delta Township-based Crippen Oldsmobile, GMC, Mazda, Volvo.

"Oldsmobile has been a great product for over 100 years. This would give us the luxury of more time to find something that could replace it."

Dealers should get a longer grace period because they were pushed into their predicament by GM, said Jude McCartin, spokeswoman for Sen. Jeff Bingaman (D-N.M.), who authored the amendment.

"The dealers are not choosing for this to happen," McCartin said.

"The senator thinks six months isn't enough time for them to invest in a business."

Full Article Here