Hybrid SUVs Skip Gas-Guzzler Tax, Still Get Hybrid Credit Thanks To Tax Code Loophole

GM's two-mode hybrids, the Tahoe and Yukon, along with Chrysler's versions, the Durango and Aspen, have come to an ironic intersection in the tax code: These vehicles are eligible for a hybrid tax credit, yet theoretically should also be hit with the gas-guzzler tax. Does that sound like the world's loopiest loophole to you? We certainly think so.

A little history first. Back in '78, when the guzzler tax came into existence, it penalized vehicles that got fewer than a combined 22.5 MPG; however, trucks, vans and SUVs weren't included because they made up such as small percentage of personal vehicles. Fast forward 30 years, there's a Grand Cherokee in every garage and some folks say it's high time to revisit the gas-guzzler tax...and perhaps the hybrid tax credit. Let's just say we can see both sides of the argument.

It's probably evidence of how far we haven't come that 22.5 combined MPG doesn't seem all that low to us. Regardless, if we're going to have a tax, then a true gas-guzzler tax should apply to gas guzzlers — vehicles that can't top 18 MPG combined — and be made an across-the-board rule, regardless of vehicle type. Yeah, there'd have to be an out for contractors, and yeah, some folks would cheat. What's new?

What about the hybrid tax credit? The intention was to help folks afford hybrids until the costs have been amortized enough for automakers to lower the price. But guess what? Prices ain't coming down. Instead, it's nothing more than a cheap gimmick. A better alternative would be to apply a "gas-sipper credit," a sort of reverse gas-guzzler tax that would credit buyers of the most fuel-efficient vehicles.

In the end, Americans are going to buy what they want, burn what they want, and drive as fast as they like. It's what we do here, and that's all good by us. But a little cash under the table to "do the right thing" is apparently part of the American way too — especially when it's complete hypocrisy. [blogs.nytimes.com]