The SUV disease spreads
Posted by Yankee on October 4, 2005 - 12:58pm
I was dismayed to hear the story "SUV Buyers Defy High Price of Gas in France" on NPR this morning. This piece discusses how SUVs are becoming ever more popular in France, to the extent that Renault and Peugeot are going to be coming out with new SUVs in 2006 and 2007, respectively. (On the other hand, the mayor of Paris is considering banning SUV traffic in the city center during rush hour, and there's a rogue group of anti-SUV activists who let the air out of the tires of the SUVs they come across.)
Personally, I liked having at my disposal Roscoe Bartlett's famous comment about how we'd be hardpressed to argue that Europeans are worse off than we are because they have higher gas prices and drive smaller cars: "I see as many smiles on their faces as I see on Americans' faces." I hope this is a trend that isn't going to catch on.
“Most people spend more time and energy going around problems than in trying to solve them.”
—Henry Ford
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http://www.greencarcongress.com/2005/10/sales_of_fullsi.html
The researchers for World Values Survey described the desire for material goods as "a happiness suppressant".
"They say happiness levels have remained virtually the same in industrialised countries since World War II, although incomes have risen considerably.
The exception is Denmark, where people have become more satisfied with life over the last three decades."
- more here:
http://news.bbc.co.uk/1/hi/world/africa/3157570.stm
- Newsweek version here:
http://msnbc.msn.com/id/5456869/site/newsweek/
I like the mention of Denmark, because they are famous for their bicycling ;-)
Still, Bartlett's point is the same as the one you're making. In his highly anecdotal version, the Europeans are just as happy as we American gas guzzlers are.
http://www.timesonline.co.uk/article/0,,2099-1793873_1,00.html
Modern humans, stuck with an ancient brain, are like rats on a wheel. We can't stop running, because we're always looking over our shoulders and comparing our achievements with our neighbours'. At 20, we think we'd be happy with a house and a car. But if we get them, we start dreaming of a second home in Italy and a turbo-charged four-wheel-drive.
This is called the "hedonic treadmill" by happiness scholars. It causes us to rapidly and inevitably adapt to good things by taking them for granted. The more possessions and accomplishments we have, the more we need to boost our level of happiness. It makes sense that the brain of a species that has dominated others would evolve to strive to be best.
[...]
At the Royal Institution, Nettle explained how brain chemistry foils our pursuit of happiness in the modern world: "The things that you desire are not the things that you end up liking. The mechanisms of desire are insatiable. There are things that we really like and tire of less quickly -- having good friends, the beauty of the natural world, spirituality. But our economic system plays into the psychology of wanting, and the psychology of liking gets drowned out."
Uncle Sam pays not only mileage expense but let's you depreciate your vehicles. The more expensive the vehicle, the more you get to depreciate. But it has to pass the "business use" sniff test, so buying a Viper or a Lamborghini will not usually work.
What will nearly always work is buying a 4-door luxury car or a 4x4 diesel truck, with every gizmo and option you can get them to stick on it. Since they raised the mileage expense, it helps to offset higher gas prices as well.
Uncle Sam gives you two choices - feed him or feed his debt driven consumer economy. If you feed him, you get bupkiss. If you feed his economy, at least you get to drive something nice...
When I had a consulting business, I remember having to pay self employment taxes (the other half of social security and medicare). But that's really just a tax that everyone has to pay. It's just that the business owners get to do the paperwork for it.
Or are you talking about something else like state taxes?
What business owners can do that the us low class wage earners can't do is deduct business expenses like SUV's, fancy lunches with 'clients' and the expense for the fancy aquarium in the waiting room. We can only spend our after tax income on those things.
The other big cost is health insurance. Not technically a tax, I know, but the effect is the same.
Two links with copious model-level data on Ford and GM sales:
Ford: http://biz.yahoo.com/prnews/051003/dem007.html?.v=24
GM: http://biz.yahoo.com/cnw/051003/mi_gm_september_sales.html?.v=1
As for gigantic houses, well, I'm certainly equally disdainful of those. I think they're unnecessary the way SUVs are. This goes along with my general distaste for suburbia.
And I'm not a businessperson, so someone else can comment on the superfluosity of business travel.
I do as well think the bigger SUV's are just that much extra steel to run around in. And I can't see why anyone with a brain wants them, except I think some folks just can't see this whole mess lasting past the next season of Survivor, or that they do not have any real Brain matter up there to fool with.
But then Again, I can walk the 6 miles across town just to visit a friend.
Charles,
Roses, The petals make a good salad or out of hand snack, a bit tart, The hips if the big red kinds have loads of vitamin C in them and make good teas, or jams.
(Hat tip: Treehugger)
Business owners actively search for ways NOT TO PAT taxes due to our inordinate burden. So traveling for a conference or seminar can be a total deduction from you bottom line, lowering your adjusted gross considerably. If you happen to take your significant other, then you are basically traveling for half price all the way around.
It comes down to spend it or pay it in taxes - not a difficult decision for most business owners.
Consider a consultant who makes $100,000 a year. I don't know anything about the US tax rates, so let's assume that he pays 30% tax. Thus he pays $30,000 tax and ends up with $70,000 'in his hand'.
Now let's say that he decides to go to a flash conference at a resort that costs $5000. Becuase it is tax-deductible, this amount is deducted from his gross income ($100,000) before his tax is calculated. Thus he ends up paying $28,500 of tax on a total taxable income of $95,000, and ends up with $66,500 'in his hand'.
So, yes, by going to the conference he ends up paying $1,500 less tax, but he also ends up with $3,500 less in his pocket!
Paying $3,500 to lower your 'inordinate burden' by $1,500 does not seem to make financial sense to me.
If you were meaning something else, then please explain what you meant.
With vehicles, there's a particular stupidity in the tax code that means an SUV can be tax deductible whereas a regular car may not be. So for the self-employed, an SUV can actually be cheaper than a car. (This is talking about the sticker price alone, of course. If they actually drive it any significant distance, the SUV's gas-guzzling will quickly make it more expensive.)
I think sometimes it pays to be a tough guy, and pay the tax.
To take your example, if you are going to attend the conference whether or not it can be claimed as a business expense, you definitely benefit by $1,500 by claiming it as a business expense. What does not make sense is to attend the conference merely to claim the expense.
I wish I could just pat my taxes...
Even though I think SUVs are genuinely stupid, I don't think I have any right to tell someone what type of vehicle to buy except where my life is significantly and negatively affected by that choice. (So getting those Hummers off the road because they are a safety nightmare for other drivers is perfectly valid.)
My favourite solution to the SUV symptom is just to raise fuel taxes. Heck, by taxing carbon emissions and crediting carbon sinks, we can basically discourage all fossil fuel use, but still leave the choice with consumer. Throw in a monthly cheque for every citizen to cover basic energy needs and you have a system that leaves people free to decide what's right for them, dicourages consumption of a dwindling resource, makes green-folk happy, and doesn't leave the poor out in the cold.
Of course, the approach I've outlined requires a limited resource that's production seems to have peaked in the 80s: Political will.
In some cases, dealers are flatout refusing to accept large SUV's as trade-ins.
It's about time that market collapsed.
Ultimately, I don't care if you drive an SUV, because you do not directly affect me and my driving habits. The only person directly affected is YOU.
If you have the cash to fill up your tank, then you go for it! I'm sure you don't need the extra money anyway!
What I and the other 'treehuggers' are complaining about is the Mom in downtown metropolis using her 4WD SUV to drive her kids across 3 city blocks to their school and back.
Here in NZ there is a posh suburb in Auckland called 'Remuera' and this type of vehicle driving around Auckland (without a speck of mud on it) is known as the 'Remuera tractor'!
Have a good one!
When you take a breath of that fresh mountain air, that's a privilge, not a right. Is it your right to make lifestyle choices that will ultimatly affect the ability of others to live in an environment where they can't breathe the air and eat the food ?
SUV's are a small part of a very large problem. 4WDs are an integral part of rural life, I accept that, but Are SUV's a vital part of city living ?
How does the choice of a consumer in a global market affect my life? It's spring here in NZ, and the hole in the ozone over Antartica is breaking up. That hole was caused largley by CFC's released in the northern hemishere. It means we get increased levels of UV and consquently skin cancer among other delights. When GWB stated that the kyoto protocol does not apply to the developed world, had anyone explained to him that one of the major impacts of climate change will be more hurricanes of greater severity...
Questioning the need for SUV's is critcal as part of the process towards changing the way we, and therefore those that come after us will live.
I've told this joke to two business acquaintances:
I point to a very large SUV and say "Wow, I didn't know they made p***s that small!"
In each case they had just purchased a very large SUV. Quite embarrassing (but kind of fun).
Gas is more expensive (5$ a gallon) than in the US, cars are more expensive (many SUV's over 70000$) and salaries are lower.
Don't count of many SUV drivers giving up their vehicles because of gas prices. In fact, many will buy more SUV's if gas goes up because it gives an "elite image" (they can afford something most can't).
Still, I think it would be a good idea to revise the Finnish tax code so that larger cars - or those that consume fuel excessively - get taxed even more if they do not serve any useful purpose.
Perhaps one can think this as a benefit resulting from extremely high taxes on gas and automobiles; the downside is that the cars on the whole tend to be old and not as safe as the new models.
Currently supply & demand for oil are more or less in balance. Because of this and the local fluctuations, oil is only $65.
Next year, demand will outstrip supply with 2.5% or so. The year after, with 5%.
When trying to think about 'Can I still drive my SUV?', you should really concentrate on gas being $5 in the US and $10 in Europe.
The difference is that currently there is no demand destruction, it's just tight. Next year, we will have to go back. For the first time in history. That is a very different ballgame.