Two senators oppose tire tax hike proposal

Two United States senators have concerns about a proposed Internal Revenue Service (IRS) rulemaking that would eliminate a key tax exemption for mobile machinery.

Senate Finance Committee Chairman Max Baucus, D-MT, and Sen Charles E Grassley, R-IA, the panel's ranking Republican, expressed concerns to the IRS about the economic impact such a rulemaking would have on thousands of businesses at a time when they can least afford it.

Construction companies, drillers, and other small businesses would pay higher excise taxes on the heavy-duty tires that are fitted on mobile machinery. Tire manufacturers currently collect federal excise taxes on those tires. The IRS proposal would require collection of additional taxes from tire purchasers, increasing the administrative burden on tire makers.

The Rubber Manufacturers Association has joined the Mobile Machinery Coalition in an effort to defeat the proposed rule. The group argues that such heavy-duty equipment makes minimal use of highways and spends most of its time offroad.

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