Fuming Over Fuel Costs? The Tax Code Can Help

We don't have to tell you how expensive fuel is. In many areas around the United States, gasoline now costs well over $3 a gallon, which has motorists thinking about how best to ease the pinch at the pump this summer. Amazingly, there might be help from an unexpected source. According to tax experts at H&R Block, there's relief in the tax code -- if you know where to look. Of course, the best advice is to limit fuel consumption, but for those who can't or won't restrict their driving this summer, not knowing what tax benefits are available is like burning money twice.

"Americans don't seem to be ready to curb our driving habits, but that doesn't mean we have to idle by and waste our paychecks," said Maggie Doedtman, H&R Block's advice delivery manager. "With gas prices through the roof, it pays to know what benefits are out there."

To begin with, some work-related costs are deductible if employers don't reimburse them. If a taxpayer is required to travel somewhere other than his or her primary place of employment, for example, those expenses can be claimed as itemized deductions. The commute to and from a second job (one taken to pay for gas, perhaps) can also be written-off, according to H&R Block.

With a little planning, even summer vacations can offer some tax relief. If taxpayers explore job opportunities as part of their itineraries, they can claim certain costs as they fit into other deductible categories. A computer engineer vacationing in Silicon Valley, Calif. for instance, can claim mileage to and from a high-tech job interview.

The vehicle-related costs that you as a taxpayer incur to move for a new job can also be deducted, depending on the distance between your new home and new job. So can miles driven for medical or charitable purposes. Documentation is required whenever a taxpayer is claiming a mileage deduction, and keeping detailed records can prevent major headaches should the Internal Revenue Service have a question later.

"Travel costs can add up fast, especially with the price of gas increasing," Doedtman said. "Claiming mileage deductions makes sense, but keeping track of your trips with a log is important so you can substantiate the benefits you'll receive."

Claiming mileage deductions isn't the only option, either. If the time's right for you to buy a new vehicle, taxpayers fed up with the high price of gasoline would do well to consider alternative-fuel vehicles. A dollar-for-dollar credit up to $3,000 is available for hybrid vehicles, depending on the make, model and number sold. Other tax credit amounts are available for other alternative-fuel vehicles.

Even getting rid of an old, low-fuel economy car could qualify taxpayers for a tax benefit. If a vehicle is donated to a charitable organization, the amount that the charity later sells the vehicle for (or the fair market value if the vehicle is kept and used by the organization instead) can be claimed as a charitable deduction.

More information about vehicle- and fuel consumption-related credits and deductions is available at H&R Block. In addition, taxpayers can visit an H&R Block office for a consultation.

Driving Today Contributing Editor Tom Ripley writes about the auto industry and the human condition -- including death and taxes -- from his home in Villeperce, France.

Congestion Stalls the Unprepared

During rush hour in any major city, it seems like cars are everywhere. Getting through the morass of traffic is both a time-waster and a stress-producer. As the U.S. population continues to grow, increased road congestion has becomes a major problem. Recently, services available by phone and on the Internet have allowed drivers to check their routes before they depart, but most consumers don't take advantage of this ability. A recent survey sponsored by Telenav found that 72 percent of drivers do not check for traffic updates prior to hitting the road, leaving themselves potentially unprepared for long commutes and dependent upon intermittent radio station updates. And this can lead to frustration.

Road congestion isn't going away, either. In 2003, Americans spent 3.7 billion hours in traffic, and the average commuter now loses 47 hours to gridlock every year. Additionally, according to some estimates, driving in smaller cities like Atlanta, Minneapolis and nine other urban areas will be worse than present-day Los Angeles by 2030.

One answer is to get the traffic information you want and need on the go.  Currently, several technologies monitor traffic flow, but there are limited avenues to make this information available to drivers, especially when they are already in transit. Having a device on hand that provides real time, proactive rerouting could potentially reduce road rage and travel-related stress. And the stress-provoking nature of traffic congestion should not be taken lightly. One scientist found that the tension commuters experience when stuck in traffic is comparable to first-time parachutists. Receiving timely traffic information is a better option than jumping from a plane. Seventy percent of the 490 poll respondents in TeleNav's survey said they have been stuck in traffic and wished there were some way to quickly find a faster, alternate route.

"The benefits of providing a service to drivers that allows them to avoid travel congestion are immeasurable," said HP Jin, TeleNav president, CEO and cofounder. "With such a solution, not only can road warriors spend less time driving, but their lifestyles could also potentially be improved, both physically and mentally."

While some drive new luxury cars whose navigation systems offer real time traffic information and rerouting, the vast majority of us don't have that ability. But most of us do have mobile phones, and the good news is that GPS-enabled mobile phones can bring the same real time information to solve traffic headaches. For instance, TeleNav launched TeleNav Traffic in January as part of its TeleNav GPS Navigator service. It proactively monitors traffic along a driver's specific route and provides ongoing, real time alerts of upcoming congestion and incidents. If drivers would like to choose faster, alternate routes, they can do so simply by pressing a single button on their mobile device.

TeleNav GPS Navigator provides a cornucopia of services comparable to in-car systems found in luxury vehicles. It includes automatically updated maps and business locations, full-color 3D moving maps, traffic alerts with one-click rerouting and speech recognition. The service will also find Wi-Fi hotspots and point out the locations with the lowest fuel prices. Now, if it could just provide a "pretty woman" alert and sports scores, it would offer everything anyone ever needed.

Will Capitol Hill Kill the American Auto Industry?

The U.S. Senate Commerce Committee took an unprecedented step recently when it approved a 40 percent increase in the Corporate Average Fuel Economy (CAFE) mandate over the next decade. While at first glance the move might be seen as a potential boon to consumers who are currently plagued by high gasoline prices, it may have a rather stark, unintended consequence -- a deathblow to the U.S. domestic auto industry.

Is this threat hyperbole or real? One thing on which there is no doubt is that the auto manufacturers who market vehicles in the United States, be they foreign or domestic, are opposed to the change. They feel the move to force them to raise the fuel economy of their individual vehicle fleets -- the array of cars they sell in a given year -- to 35 miles per gallon in 2020 is neither in their best interest nor in the best interest of the majority of their customers.

Former U.S. Congressman, Dave McCurdy, who now heads the Alliance of Automobile Manufacturers, a lobbying group made up of both import and domestic manufacturers, called the measure "unrealistic and unattainable." Environmental groups argue that the proposed standards are not just realistic and attainable, but they are also necessary to address important issues like the production of so-called "greenhouse gases" and our continued reliance on foreign-based sources of petroleum.

Certainly those are important issues, though the constant drumbeat on carbon dioxide and global warming may well prove to be "false science." (See Driving Today feature story, "A Weatherman Looks at Climate Change," April 23, 2007.) One wonders if, in the zeal to address them, environmentalists are willing to sacrifice the domestic auto industry and the hundreds of thousands of workers it employs.

Why is the industry at risk? When McCurdy calls the new standards "unrealistic and unattainable," he is only half right. They might be unrealistic, but they are not "unattainable." It is simply that the stretch to reach those lofty goals in the time frame specified puts the domestic vehicle manufacturers at high risk. The reason is not that they can't build cars that get 35 miles per gallon. Certainly they can, as evidenced by the fact that General Motors currently offers more models that deliver 30-mpg or higher highway mileage than Toyota does. But just try to convince the average consumer of that fact.

It is the perception issue that really places the already shaky U.S. manufacturers on the precipice of doom. Both opinion polls and sales analyses have shown that when U.S. consumers seek vehicles that offer high levels of fuel economy, they look to import manufacturers. This is a reflection of the fact that domestic manufacturers have traditionally placed most of their emphasis on larger, inherently lower fuel-economy vehicles. Similarly, the domestic manufacturers have traditionally reaped the bulk of their profits from larger vehicles, netting lower profits or perhaps even selling smaller vehicles at a loss so they can achieve the current CAFE standards. So the proposed standards present a distinct and real threat to the domestic industry not because those companies cannot, in the abstract, build high-fuel-economy vehicles, but because it is highly questionable that they can, in reality, change consumer perceptions about their wares and their basic business model in time to meet the sales targets of the proposed standards.

To illustrate this, here's an example. Let's say Congress decided that coffee drinking was unhealthy and mandated that coffee retailers like Starbucks and Peet's abruptly curtail their sales of coffee drinks and, instead, radically increase the percentage of green tea drinks sold. Further, assume that if they fail to meet the mandated percentage they would face massive fines or find their ability to sell coffee rescinded altogether. Could they accomplish this? Could Starbucks, known from its beginnings as the place for coffee, suddenly become the "green tea place"? And will individual American consumers decide they should eschew their desire for coffee and switch to green tea in high enough numbers to match a lofty government quota?

While this scenario might seem ludicrous, it is a close analogy to what U.S. automakers are being required to do by the recently approved CAFE standards increase. How this plays out will be the subject of intense scrutiny, as the hobgoblin of unintended consequences is definitely in play, if we decide to deal with it.

A native of Boston, Driving Today Contributing Editor Tom Ripley writes about the auto industry and the human condition from his home in Villeperce, France.

Notes from the New York Auto Show

On the heels of the internationally attended Geneva Motor Show, this year's New York Auto Show left some observers with a sense of déjà vu. But, it was also filled with enough surprises to capture the attention of auto industry observers.

The general media always seeks "show themes," but the New York show was hard to categorize. Among other things, it featured some interesting role reversals. Toyota, through its Lexus luxury division, introduced a new generation full-size SUV in the form of  the 5.7-liter, 381-horsepower LX 570. General Motors unexpectedly unveiled three minicars -- the Chevrolet Groove, Beat and Trax. Those minicars weren't just for show -- GM officials told us at least one of the midget offerings, perhaps the Trax small SUV, might be offered in the United States, depending on consumer reaction. And in yet another role reversal, Hyundai, long known for its inexpensive vehicles, showed a luxury model called Concept Genesis that demanded the attention of the traditional luxury brands.

One of the most closely watched events at the show was its keynote speech by Alan Mulally, the former Boeing executive hired to steer Ford Motor Company back to profitability. His four key goals for the company -- adjusting product volume to match marketplace demand, trimming the workforce, revitalizing the entire product line by 2010 and working to consolidate the supplier chain -- seemed on target. But Mulally really won the admiration of many observers by his straightforward approach and willingness to entertain tough questions. Ford also grabbed some headlines by unmasking its first 2009 production vehicle, the Ford Flex. Set to go on sale in the summer of '08, the Flex is a long, rectangular, nearly "plain-wrap" family wagon based on the Fairlane concept vehicle that drew positive reviews at the Detroit show 15 months ago.

The Flex was one of several crossovers introduced at the show. The Infiniti EX, while technically still a concept, gives a clear view of what we can expect from the upcoming production EX35, meant to battle vehicles like the sporty Acura RDX and BMW X3. Winning the ugly-duckling-to-swan award was the Subaru Tribeca crossover, which ditched its B9 sub-head and Edsel-inspired grille in favor of a very handsome new look. Taking the prize for the most radical design was the Mazda Hakaze crossover concept whose theme was inspired by shifting desert sands.

Renewed entries like the Volkswagen Jetta SportWagen and Volvo V70 indicate that not every people-hauler has to be a crossover. Both models are station wagons and proud of it. And many try to write the obituary of the SUV, Jeep unveiled an all-new Liberty and an updated version of its Grand Cherokee. In additional to its minicars, General Motors offered updates to some of its largest offerings, including the Buick Lacrosse, Cadillac STS and Hummer H2 and H3. 

So the New York show offered a fascinating panoply of vehicles, accompanied by the pleasant task of hobnobbing with many of the industry's movers and shakers. And it again offered something for nearly everyone...because that's what today's auto industry does.

Based in Cleveland, Driving Today Contributing Editor Luigi Fraschini covers the global auto industry. 

Traffic Congestion Clogs Quality of Life

The West used to be the Big Sky Country, an area of wide open spaces, but all that has changed. Traffic congestion and the accompanying delays are a fact of life in many communities and for many U.S. adults. And, surprisingly, those living in the West find traffic even more onerous than those living in the East, Midwest or South. Just over one-third (37 percent) of Americans overall say that traffic congestion is a serious problem in their community, and in the West that figure jumps to more than half. In contrast, just 21 percent of Americans say traffic congestion is not a problem at all, according to a recent survey by Harris Interactive.

There are marked differences between regions when it comes to consumers' views on traffic. Just one-quarter (26 percent) of those who live in the Midwest and 32 percent of those in the South say traffic congestion is a serious problem. In the East, over one-third (37 percent) call traffic congestion a serious problem, and in the West those considering it a serious problem jumps to 56 percent. It is also a problem that has many Americans throwing up their hands in resignation. One-quarter of all Americans say traffic congestion is a serious problem that is not being addressed, while just 12 percent say it is being addressed.

Since approximately a third of consumers nationwide consider traffic congestion a serious problem, it begs the question: Would U.S. voters accept a congestion tax of the kind recently instituted in London? While the new levy has not led to armed rebellion in the U.K., Americans do not appear to be nearly as ready to embrace such a measure in their cities. Two-thirds (66 percent) of adults oppose such a tax with half (51 percent) saying they strongly oppose it. Just 22 percent say they support it. Even among those who say traffic in their community is a serious problem, most would not support such a tax. Only three in 10 (29 percent) of those who say traffic is a serious problem support a congestion tax while 61 percent oppose it.

Another method to limit energy use and deal with traffic congestion is by housing choice. Asked if they would be willing to pay a higher price for a new house that would reduce energy use and could also reduce their monthly heating and cooling bills, seven in 10 U.S. adults say they would be willing to pay more for such a house and only 19 percent said they would not be willing. Baby boomers and echo boomers (born between 1982 and 1995) are slightly more likely than other generations (73 percent and 72 percent, respectively) to say they would be willing to do this. People, however, were not asked how much more they would be willing to pay.

Interestingly, those who use public transportation are much more likely to say traffic congestion is a serious and unaddressed problem in their area, although the fact there is public transportation for them to use seems to address traffic issues. Still, over two in five (44 percent) of those who use public transportation to get to work call traffic congestion a serious and unaddressed problem. At the same time, fewer than one-quarter (23 percent) of those who drive themselves to work share this sentiment. According to the Harris Interactive analysis of the data, this may reflect the greater use of public transportation in larger cities.

Based in a large city himself -- Cleveland -- Driving Today Contributing Editor Luigi Fraschini writes frequently about traffic and other quality-of-life issues like the inability of finding decent pizza in California.