JACKSONVILLE, Fla. — Action News Jax’s Ben Becker is investigating how a tax provision that was part of President Donald Trump’s Tax Cuts and Jobs Act of 2017 has led to new car washes and gas stations popping up in Jacksonville and across the country.
Andrew Jaffa ran his own car wash business in Jacksonville for two decades and said drivers love their cars and car washes.
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“I think it’s a sexy business,” said Jaffa, who sold his business in 2020 because he could no longer compete with new larger operators.
“It was a good ride,” said Jaffa, while it lasted.
The tax legislation allowed so-called bonus depreciation – more than previously allowed under the Obama and Bush administrations – which in turn attracted private equity firms.
“When it comes to saving money with your taxes, it’s not like anyone’s being robbed or anything,” said Eric Wilderman, who is an accountant.
Depreciation is what happens when business assets lose value over time.
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Under the law, numerous industries can depreciate 100% of the purchase price in the first year of ownership; before, depreciation was in 20 percent increments for five years. The difference is a massive tax break.
“They’re paying a less of a tax rate than maybe the people who work here [at the car washes and gas stations] maybe for the first year,” Wilderman said. “I can’t really think of any other industry that benefited as well as those two industries did.”
According to Pro-Publica, private equity firms control more than $6 trillion in assets in the United States and have acquired numerous companies in the housing, hospital and fast food industries in recent decades.
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They typically own the business for a short time, before flipping it for a profit, raising concerns about the impact on employees, customers, and communities.
“Car washes are like land banking. They are not highest and best uses no matter where they go,” said Bill Bishop, who is a former member of the Jacksonville City Council and an architect by trade. “It is a cheap easy thing to put on a site until something better comes along.”
Bishop helped lead an effort to preserve the old Arlington Federal Savings and Loan building on University Boulevard from being torn down and replaced by – you guessed it – a car wash owned by a private equity firm. Instead, it was designated a historic landmark by the City Council in December.
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It’s not just car washes but gas stations as well. Jacksonville-based Gate Petroleum has opened 18 car washes in the past few years as other gas stations have also gotten into the act.
Becker obtained records that show since 2017, there are 51 new gas stations in Duval County and 40 in St. Johns County.
“Oftentimes you are seeing gas stations do this because they already have the location, they add the car wash, and they are able to write it off a lot quicker,” Wilderman said.
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As for Jaffa, he said our love affair with cars and car washes isn’t ending anytime soon. “People love to talk about their cars, baby their cars. They accessorize their cars. They spend a lot of time, you are with your car a good portion of the day.”
Becker reached out to both Gate and the International Car Wash Association, but both declined to do an interview or issue a comment.
According to the Environmental Protection Agency, it’s much better for the environment if you use a commercial car wash than washing your car at home. Most locations reuse water several times before sending it to a treatment plant.
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