Ask Bark: Is The General's Benefit Worth the Pain in the Tax?

An anonymous GM employee writes:

I have a field role with General Motors that affords me the luxury of driving (mostly) anything in The General’s portfolio. I can choose from any brand except Cadillac, and can’t drive a Corvette or pickup (because of retail demand and limited supply). I’m 22 with student debt down into the low four digits. GM pays for gas, insurance, and incidentals like oil changes and winter tires because I need a car to do my job. I live in a snow-heavy state where I’m expected to do around 30,000 miles a year for business travel alone. Finally, I switch out cars every four months because that means it remains eligible for new vehicle incentives and programs when it’s sold back to the dealer at a big discount.

Here’s the catch: the vehicle is considered a taxable benefit.

For example, a 2016 Yukon Denali would add $10,000 in taxable income to my W2. By contrast, a Cruze Premier would be closer to $3,000. Based on state and federal taxes, the difference is between paying an extra $1,000 in taxes for the Cruze vs. $3,000 for the Yukon Denali.

On one hand, the frugal side of me says to go with the Cruze. On the other, the car enthusiast in me thinks it would be cool to drive around a top-tier GM product at the sweet age of 22 on the cheap (relatively, anyway), and that I should have something comfortable to drive given the amount of travel I do. I’m constrained by what dealers have on-ground, but am inclined towards a Regal, Camaro (might be painful over distances), Malibu Premier, or the Yukon SLT.

What should I get?

This is just further proof to me that I absolutely need to get hired by an OEM. How great is this benefit? It’s gonna be huge. The greatest benefit ever! Strong! When I become an OEM executive, I’ll get rid of that tax problem! Sad!

Sorry, I got carried away there. Anyway, this sounds like a fantastic opportunity for you to cycle through some of the General’s offerings and figure out what it is you like. Best of all, if you don’t like something, you’re only stuck with it for a third of a year.

There are a couple of things to figure out before you plunge head first into a Yukon SLT. Take a look at your effective tax rate and make sure that this benefit won’t kick you into a new tax bracket. Sounds like you’re figuring on an overall hit of around 33 percent on state and federal, but if this extra $10,000 a year kicks you up from the 25 percent to the 33-percent federal bracket (just as an example), then it’s a larger impact than you’d like it to be, because that added part of your new income will be taxed in that higher bracket.

As far as the car recommendation is concerned, I’m going to strongly recommend that you don’t get a Cruze for that amount of driving. The seats in the Cruze are notoriously uncomfortable for longer stretches of driving. I also hesitate to recommend a Camaro, simply because of the visibility issues that you’ll encounter. It truly is like driving something out of the panzer division. The NVH levels inside of a Camaro SS won’t be particularly enjoyable over long hauls, either. But, with summer upon us, a 2.0-liter turbo Camaro convertible might be a fun mode of transportation from July-September.

I know you weren’t able to tell me the location of your specific “snow climate,” but if it’s an urban area like Chicago or Detroit, I wouldn’t recommend driving the Yukon. I’ve done it in Manhattan. It wasn’t a great experience, to say the least. Parking that mofo anywhere outside of the RenCen garage won’t be a treat, either.

The Regal is a cool, understated, Q ship of a car. I’ve enjoyed driving them in the past, and I think that when you are my age (38 and counting), that will be an excellent choice. I think at the age of 22, you’ve probably signed yourself up to be involuntarily celibate if your date sees you in a Buick. So I’m gonna say no to that.

I don’t have a single mile behind the wheel of the new Malibu, so I can’t say much about whether that’s a good option. (Tim has some seat time in the new ‘Bu though, and he liked it.) However, I think that there’s a very strong option if you want a Chevy sedan, and that’s the Impala. I would rock a V6 LTZ Impala every day of the week, and twice on Sundays. I love everything about the Impala — the motor, the driving position, the interior, the stereo, even the fuel economy. If I were in your shoes, that would be the car I’d park in my driveway for the next four months and beyond.

However, there’s one car that you omitted from your verboten list, and that’s the Chevrolet SS. If the SS is on the list of cars you can get (which it might not be due to limited production), then this discussion is completely over. A manual transmission, magnetic-suspension SS is a car that is simply not to be trifled with. You’ll be faster than 95 percent of the cars on the road and do it in relative luxury. Get yours in red and be the envy of everybody you know. Then, invite your friend Bark to come to a review of it.

[Image: © 2015 Alex Dykes/The Truth About Cars]

Questions for your ol’ buddy Bark? You know where to send them. E-mail me at barkm302@gmail.com, find me on the Twitters at @barkm302, or send me a picture (if you’re not a dude) on Instagram.