WASHINGTON -- A top congressional tax writer wants to repeal an accounting tool that many automobile dealers consider essential to their businesses.
Rep. Charles Rangel, D-N.Y., today unveiled a proposed tax code overhaul that he said would reduce tax bills for 90 million families and for many businesses. Rangel is chairman of the House Ways and Means Committee.
One provision he would use to raise revenue to offset those cuts is the repeal of the last-in-first-out method of accounting for inventory, such as vehicles on dealer lots. It is commonly known as LIFO.
David Regan, vice president for legislative affairs of the National Automobile Dealers Association, said NADA has been aware that some in Congress are eyeing LIFO repeal as a revenue raiser.
So, while Rangels idea is not a shock, NADA will work to make sure LIFO repeal is not part of any proposal, Regan said.
Precipitous LIFO repeal would trigger tax charges for which no cash exists to pay the bill, he added.
Some industry observers think dealerships already in trouble would be pushed over the edge. More diplomatically, Regan said LIFO repeal would be another stress that a troubled industry doesnt need.
LIFO is an accepted accounting method, and no one claims that dealers abuse it, Regan said. The sole purpose of repeal is to raise revenue, he added.
Rangel indicated that his goal for now is to float ideas for consideration next year, when he wants Congress to enact the mother of all tax reforms.
Republicans on his committee quickly labeled his plan the mother of all tax hikes.
It would raise tax rates on wealthy individuals and eliminate a variety of corporate tax breaks. But it also would repeal the alternative minimum tax on individuals and lower the corporate income tax rate.