Hybrid Car Review

If Sen. Ron Wyden, D-Ore., and Sen. Bob Bennett, R-Utah get their way, all fuel efficient cars will be eligible for tax credits, not just hybrids.

If the bill gets passed (its not likely to this late in the session), the tax credit will range from $630 up to $1,860 depending on the fuel efficiency of the vehicle pruchased. Passenger vehicles that are rated at 34.5 mpg or greater would be eligible. Light trucks would be eligible at 27.5 mpg or better.

The tax credit would cost $1.3 billion a year, but would be totally offset by eliminating a tax break given to oil companies. Only the five largest oil companies are eligible to apply for this tax break at the moment. The companies can "expense 70 percent of domestic "intangible drilling costs" -- such as leasing equipment and land acquisition -- in the first year, instead of depreciating it over a number of years. The legislation would require the companies to write off those expenses over five years instead of one."

Of course, oil company representatives are against this bill, claiming it will be bad for domestic oil drilling. If it becomes more expensive to drill here, they will move their drilling to other countries, forcing the US to become more dependent on foreign oil imports.

On the other side of the coin, automakers and environmental groups are throwing their support behind the proposed legislation.

Source:Bill expands tax credit for gas-saving cars, trucks