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Luxury tax set to expire Dec. 31

November 22, 2010
 

The automobile luxury tax apparently will expire Dec. 31, as scheduled, now that Congress has adjourned for the session, according to the American International Automobile Dealers Association. The AIADA has fought for the tax's repeal since it was instituted in 1991. Congress originally tied the luxury tax to high-ticket items like yachts, diamonds and automobiles, but later winnowed the list solely to automobiles above $30,000.

The luxury tax threshold for 2002 is a 3 percent tax on vehicles that sell for over $40,000. President Clinton in 1996 signed legislation to phase out the tax by this year. However, the economic climate has changed dramatically since 1996, and the AIADA said Congress someday may resurrect the tax to pay for other activities.

 

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