WASHINGTON – Add motorcycles and motor homes to the list of things buyers can get federal tax breaks for, courtesy of lawmakers who won eleventh-hour additions to the stimulus bill to help home-state industries.
Tax deductions for both types of vehicles were added to the compromise $787 billion stimulus package that lawmakers were voting on Friday. An earlier version of the language, included in the Senate-passed stimulus, only applied to passenger automobiles and light trucks.
Four senators successfully lobbied for including motorcycles in the legislation: Bob Casey, D-Pa., Christopher Bond, R-Mo., Russell Feingold, D-Wis., and Herb Kohl, D-Wis. Harley-Davidson Inc. announced last month that it will cut 1,100 jobs over the next two years, with about 650 cuts in Wisconsin, more than 400 at a facility in York, Pa., and about 85 at a plant in Kansas City, Mo.
“The issues of consumer confidence and tight credit markets have not evaded motorcycle dealers,” the four senators wrote to congressional leaders who put the finishing touches on the stimulus bill. “The effect of the downturn not only impacts the dealers – it has hurt manufacturers as well.”
At the same time, two Indiana Democrats – Sen. Evan Bayh and Rep. Joe Donnelly – won the same benefits for recreational vehicles, many of which are made in Indiana. Top manufacturers in Indiana include Coachmen Industries Inc., Damon Corp., Gulf Stream Coach and Dynamax Corp.
Much of the state’s motor home industry is focused around Elkhart, Ind., which calls itself the “RV Capital of the World.” President Barack Obama visited Elkhart Monday as he pressured Congress to quickly approve the stimulus legislation. Unemployment in that part of the state exceeds 15 percent, according to state officials.
Eleven of the country’s 98 recreational vehicle manufacturers have closed in the past two years, with manufacturers, suppliers and dealers shedding thousands of jobs, Bayh’s office said.
Under the stimulus legislation, purchasers of new cars, light trucks, motor homes and motorcycles will be able to deduct the sales tax they pay through the end of this year, a provision with an estimated cost of $1.7 billion. Including recreational vehicles and motorcycles added about $100 million to the cost of the tax break, according to calculations based on revenue estimates by the congressional Joint Committee on Taxation.
The original Senate-approved language also allowed deductions for the interest paid on vehicle loans, but negotiators dropped that in an effort to make the bill less expensive.