Tax Breaks Eyed For Vehicle Gifts
The final bill in a three-part “wheels to work” package has been introduced in the House. Supporters say the change will increase the reach of programs that help the unemployed gain access to needed transportation.
The most recent bill would also benefit small businesses that donate cars to organizations working with Family Independence Agency (FIA) offices around the state. The businesses would be eligible for a new Single Business Tax deduction totaling up to $200 per year.
The SBT is being phased out, but the bill would provide tax benefits until 2009, said Rep. Lorence Wenke, R-Richland Township, who developed the bills.
If all three bills become law, the SBT deduction would be complemented by a personal income tax deduction for individual donors. Program clients would also be exempted from paying sales tax on the car.
Co-sponsor Rep. Rick Shaffer, R-Three Rivers, said the deductions would offer state tax incentives that would complement deductions donors may also be eligible for at the federal level.
Shaffer’s experience as a health administrator in St. Joseph County led him to believe that his county can benefit from the new initiative.
“I know there’s a lot of people in the area who are ready and willing to work, but transportation is a big hindrance,” he said. “It’s a great program, especially for low-income families that find a job but sometimes, oftentimes, don’t have reliable transportation.”
The package is specifically designed to foster growth in Goodwill Industries’ Wheels to Work program, which works in tandem with many FIA offices around the state by providing cars to unemployed workers. But any program doing similar work would benefit.
Goodwill Industries of Southwest Michigan worked with Wenke to develop the bills.
“We’ve tried to communicate about programs that work,” said John Dillworth, the president of the Kalamazoo-based organization. “This is one that does work. It’s had incredible success.”
Dillworth said 98 percent of people entering the statewide Goodwill Industries program have remained employed for at least a year. And similar programs have had a 90 percent success rate.
The Kalamazoo program has had 137 participants since it began in August 2001, 135 of whom remained employed for the first year or are still in the yearlong program, Dillworth said. The success of the program is attributed to the fact that it follows its clients for a full year.
Dillworth said increasing car donations is key to increasing the program’s impact. “It’s not like we’ve got a surplus of cars.” He said his program could use 10 times more cars than it currently receives in donations.
Dillworth’s organization calculates the program will save taxpayers $7 million by increasing employed, taxpaying workers and decreasing unemployment benefit expenditure.
Wenke said the House Fiscal Agency has not yet determined what the bills would cost the state in lost taxes. He expects the House figures to be much more conservative than the numbers Goodwill furnished, because government cost estimates do not use the same types of forecasting techniques to predict future revenue. Still, he predicts any loss in revenue will be negligible.
Shaffer said the plan is a great deal for taxpayers. “It’s a great piece of legislation. Everybody wins.”