Overview
Title
To amend the Internal Revenue Code of 1986 to establish the truck fleet retreaded tire tax credit, to require Federal agencies to consider the use of retreaded tires, and for other purposes.
ELI5 AI
The bill wants to give a little money back to truck companies when they use old tires that have been made like new again, to help save the planet and their wallets. It also asks government helpers to buy these special tires if they can, but there are some questions about how it will all work out safely and if the money is enough to make a big difference.
Summary AI
S. 4685 proposes changes to the Internal Revenue Code of 1986 to create a tax credit for using retreaded truck tires. The bill aims to encourage truck fleets to use retreaded tires by offering a credit that amounts to 30% of the tire's cost or up to $30 per tire. It also requires federal agencies to buy retreaded tires for their fleets when available, and calls for updates to federal purchasing regulations to support this initiative. The tax credit would apply to tires placed in service after December 31, 2024, and will terminate for tires placed in service after December 31, 2027.
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AnalysisAI
The proposed legislation, titled the "Retreaded Truck Tire Jobs, Supply Chain Security and Sustainability Act of 2024," introduces several changes intended to promote the use of retreaded truck tires. The bill would amend the Internal Revenue Code of 1986 to establish a tax credit for truck fleets that utilize retreaded tires. Additionally, it mandates federal agencies to prioritize retreaded tires when procuring tires for their fleets. The overarching goal is to enhance economic and supply chain sustainability by encouraging the use of retreaded products.
General Summary of the Bill
The bill proposes a truck fleet retreaded tire tax credit. For calendar years beginning after December 31, 2024, and ending before January 1, 2028, businesses can claim a tax credit for the purchase and use of retreaded tires on heavy-duty vehicles weighing over 14,000 pounds. The credit is determined by the lesser of 30% of the tire's cost or $30 per tire. The tires must be both retreaded and bought in the United States. The legislation also requires federal agencies to use retreaded tires, where available, as part of their fleet management.
Significant Issues
Several issues may arise with the implementation of this bill. One key concern is the definition of what qualifies as a "retreaded" tire. The bill mandates that retreading and purchasing must occur within the United States, potentially restricting international suppliers and reducing competitive options.
The $30 credit limit per tire may not be a sufficient incentive to encourage widespread adoption of retreaded tires among truck fleet operators. This cap may dilute the bill's intended effect of promoting sustainable practices.
The tax credit has a set termination date of December 31, 2027, which may not allow sufficient time for businesses to adapt their practices to take full advantage of the credit. Additionally, concerns are raised regarding the safety and performance standards of retreaded tires, particularly for use in federal fleets. The mandate for federal agencies does not account for circumstances where retreaded tires may not be suitable, which may lead to inefficiencies or safety issues.
Impact on the Public
Broadly speaking, the bill aims to support economic sustainability by encouraging the use of retreaded tires, which are typically more environmentally friendly than new tires. This could lead to reduced environmental impact from tire production and disposal. However, if businesses do not find the financial incentives compelling, the broader public might see limited benefits.
Impact on Specific Stakeholders
Businesses and Fleet Operators: For large truck fleet operators, the tax credit could offer some financial relief and encourage the use of more sustainable alternatives to new tires. However, smaller businesses might find the credit less impactful, especially if they do not purchase large volumes of tires.
Tire Retreading and Manufacturing Industry: The domestic specification for retreading and purchasing could bolster the U.S. tire retreading industry by potentially increasing demand. However, excluding international retread suppliers might have adverse effects on market prices and innovation.
Federal Agencies: The requirement for federal agencies to purchase retreaded tires could signify a shift towards more sustainable practices within government operations. Yet, this mandate may present challenges if performance standards for retreaded tires are not rigorously defined, risking operational inefficiencies or safety issues.
In summary, the bill represents a step towards integrating sustainable practices in the tire industry, leveraging tax incentives to promote environmental benefits. However, its effectiveness will depend on careful consideration and resolution of issues related to its implementation and the adequacy of its incentives.
Financial Assessment
The bill S. 4685 introduces a financial incentive in the form of a tax credit specifically aimed at promoting the use of retreaded truck tires. The purpose of this credit is to encourage sustainability and bolster economic savings by incentivizing businesses to opt for retreaded tires instead of new ones. Here's how the financial elements of the bill are structured and relate to the issues identified:
Financial Allocations and Incentives
The truck fleet retreaded tire tax credit is at the core of the bill's financial strategy. This tax credit is structured to allow businesses to deduct an amount equal to 30% of the cost of a qualified retreaded tire, or up to $30 per tire if this is less than 30% of the cost. This allocation is designed to reduce the financial burden on businesses that are considering the transition to retreaded tires.
Relation to Identified Issues
Limited Financial Impact of the $30 Credit: The maximum credit of $30 per tire may not be a sufficient financial incentive to sway businesses, especially larger fleets, to adopt retreaded tires. The limited financial impact could fail to cover the total costs associated with retreading, leaving businesses unconvinced of the economic benefits. This poses a potential hurdle in achieving the sustainability goals the bill aims to support.
Domestic Limitations: The requirement that retreading and purchasing occur within the United States could inadvertently limit competition among suppliers. This might lead to increased costs or reduced choices, which could dilute the intended cost-savings for taxpayers and businesses. The financial takeaway here is that without competitive pricing, the perceived value of the credit could diminish.
Duration of the Tax Credit: The credit is available only for tires placed in service after December 31, 2024, and will terminate for those placed in service after December 31, 2027. This short timeframe might not give businesses enough opportunity to adjust and fully benefit financially. An extended period might be necessary to realize meaningful results, suggesting that the credit's expiration could curtail its intended impact.
Federal Agency Mandates: The bill also mandates federal agencies to prioritize purchasing retreaded tires when available. Though no direct financial allocations are discussed for these agencies, the requirement potentially reduces federal spending on new tires. However, without established safety or performance standards, this could result in inefficiencies or higher costs if retreaded tires are not suitable for all operational needs.
Conclusion
The truck fleet retreaded tire tax credit presented in S. 4685 illustrates Congress's intent to tie environmental sustainability with economic incentives. However, the effectiveness of these financial measures is subject to several potential limitations, such as the adequacy of the credit amount, the scope of eligible suppliers, and the timeframe over which the credit is applicable. Addressing these issues could be pivotal to ensuring the legislation's financial objectives are met.
Issues
The definition of 'qualified retreaded tire' in Section 45BB requires that both retreading and purchasing occur in the United States. This could limit competition by excluding international suppliers, potentially leading to higher costs or reduced options for taxpayers and businesses (from Sections 2 and 45BB).
The $30 credit per tire in Section 45BB might not effectively incentivize businesses to use retreaded tires as it may not sufficiently offset retreading costs, limiting its impact on promoting sustainability and economic savings (from Sections 2 and 45BB).
Section 2 establishes a termination date of December 31, 2027, for the tax credit, which may not provide enough time for businesses to adjust operational practices and fully utilize the credit, potentially reducing its effectiveness (from Sections 2 and 45BB).
Section 3 mandates Federal agencies to use retreaded tires when available but does not establish safety or performance standards. This lack of specification could raise concerns about safety and suitability for Federal use (from Section 3).
The lack of specific documentation requirements in Section 45BB for proving the qualifications of retreaded tires could lead to ambiguities and disputes during audits, increasing the administrative burden on businesses (from Sections 2 and 45BB).
The requirement in Section 3 for all agencies to purchase retreaded tires might not consider specific agency needs where such tires may not be appropriate, potentially leading to inefficiencies or safety concerns (from Section 3).
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the bill gives it a short title, which is the "Retreaded Truck Tire Jobs, Supply Chain Security and Sustainability Act of 2024".
2. Credit for certain retreaded tires Read Opens in new tab
Summary AI
For taxable years starting after December 31, 2024, and before January 1, 2028, a tax credit is available for truck fleets using retreaded tires made and purchased in the United States. The credit is determined by the lesser of 30% of the tire's cost or $30 per tire, applicable to vehicles over 14,000 pounds.
Money References
- “(b) Per tire amount.—There shall be a credit equal to the lesser of— “(1) 30 percent of the basis of each qualified retreaded tire, or “(2) so much of the amount paid or incurred by the taxpayer during the taxable year to purchase qualified retreaded tires as does not exceed $30 per qualified retreaded tire.
45BB. Truck fleet retreaded tire tax credit Read Opens in new tab
Summary AI
For each qualified retreaded tire placed on a qualified truck fleet vehicle during the year, the truck fleet retreaded tire tax credit allows a taxpayer to claim a credit equal to 30% of the tire's cost or up to $30 per tire, whichever is less. The tire must be retreaded and purchased in the United States, and the truck must weigh over 14,000 pounds; this credit will not apply to tires placed in service after December 31, 2027.
Money References
- (b) Per tire amount.—There shall be a credit equal to the lesser of— (1) 30 percent of the basis of each qualified retreaded tire, or (2) so much of the amount paid or incurred by the taxpayer during the taxable year to purchase qualified retreaded tires as does not exceed $30 per qualified retreaded tire.
3. Use of retreaded tires for Federal fleets Read Opens in new tab
Summary AI
The section mandates that federal agencies must purchase retreaded tires from the General Services Administration's tire schedule when available, instead of buying new tires. Additionally, it requires the Federal Acquisition Regulatory Council to update regulations to reflect this requirement within one year of the law's enactment, with "agency" defined as an "executive agency" according to U.S. Code.