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New Tax Law Affects Dealerships

Those who own dealerships are rejoicing as new tax legislation was passed in Congress earlier this week. The deal will take effect for the 2011 and 2012 years. After this time period, undoubtedly, the tax legislation will once again be argued about before it passes again. 

The tax legislation has been in debate for many months, as many Democrats viewed the new legislation as being too profitable for those higher class citizens in the United States. However, it was backed by the National Automobile Dealers Association with a dominant attitude. 

The new tax legislation will impose a maximum of 35% on estates that are worth $5 million for the individual and $10 million for the company. What exactly does this mean for those that own automobile dealerships? It means that they will have greater peace of mind and not having to pay for just owning their dealership. Those that were in favor of the legislation argued that most automobile dealerships were owned by families. Meaning that they were paying estate taxes on not only the value of their business, but other objects in their family, such as their home, boats, vehicles and so on. 

For this years income taxes, there was to be no estate tax paid. However, that would have changed on January 1, when the original rate of estate taxes was to be 55%. If congress had not acted, the rate could have been the reason that many dealerships would face financial hardships. In order to make sure that the automotive world did not face yet another round of financial difficulties, the new tax law was passed. 

Studies have found that under the new law, only 440 estates are going to be taxed, which is great news for everyone. However, the tax law is still being looked down upon by Democratic members of Congress, which means the likelihood of the law becoming permanent after the two years is up does not look too bright.