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March 23, 2009 Taxation

airstream.JPGMy wife and I were having some fun this weekend looking at recreational vehicles (i.e. campers or trailers). They are fantastic. Most of even the lowest priced models include full bathrooms, gas ranges, microwaves, sleep at least 4, have flat panel televisions, and can be towed by a standard SUV.

As we were walking around we were surprised by two things. First, is that you are able to finance most of these things for up to 15 years. Second, and this is the point of the post, the government allows you to deduct the interest payments on these from your federal income taxes! Why? Because these are classified as “second homes.”

I’d love to see how this exemption got put into the tax code. As much as my wife and I love the idea of getting an RV, we simply cannot believe that non-RV’ers are forced by point of a gun to subsidize my purchase of it. And once again, it would be useful to think about the progressivity/regressivity of such a subsidy. I don’t think the lowest income Americans are buying these things (maybe I am wrong, some data would be nice).

Are we going to buy one? Likely. Will I take the tax break on the payments? No. My colleagues think that is irrational, but I find it immoral.

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