Investigative journalist Ben Becker from Action News Jax is delving into the repercussions of a tax provision embedded within President Donald Trump’s Tax Cuts and Jobs Act of 2017, which has spurred the proliferation of new car washes and gas stations not only in Jacksonville but across the nation.
Andrew Jaffa, who operated his car wash business in Jacksonville for twenty years, emphasizes the enduring allure that cars and car washes hold for drivers. However, Jaffa ultimately sold his business in 2020, unable to sustain competition against larger operators that emerged in the wake of the tax legislation.
The key aspect of the tax legislation was the introduction of bonus depreciation, exceeding previous allowances from both the Obama and Bush administrations. This provision attracted private equity firms keen on capitalizing on accelerated tax benefits. Accountant Eric Wilderman underscores that businesses are not engaging in any illicit activities but rather leveraging tax incentives provided by the law.
Bonus depreciation entails the ability for various industries to write off 100% of the purchase price in the initial year of ownership, a stark contrast to the previous system of 20% incremental depreciation over five years. This substantial tax break has particularly favored industries such as car washes and gas stations.
Pro-Publica reports that private equity firms wield significant control over assets in the United States, with investments spanning various sectors, including housing, healthcare, and fast food. However, concerns loom regarding the short-term ownership model typical of private equity firms, raising questions about its impact on employees, customers, and communities.
Bill Bishop, a former member of the Jacksonville City Council, criticizes the proliferation of car washes, equating them to temporary placeholders until more lucrative developments materialize. He cites efforts to preserve historical landmarks, such as the old Arlington Federal Savings and Loan building, thwarting plans for its replacement with a car wash.
The trend extends beyond car washes to include gas stations, with Jacksonville-based Gate Petroleum expanding its car wash operations alongside other gas station competitors. Records obtained by Becker reveal a significant increase in the number of gas stations in Duval and St. Johns counties since 2017, indicative of the industry’s rapid growth.
Wilderman explains that gas stations often opt for adding car wash services to capitalize on existing locations and expedite tax write-offs. Despite potential environmental concerns, such as water usage, commercial car washes are generally considered more eco-friendly than home-based car washing practices.
Despite attempts to glean insights from industry stakeholders like Gate and the International Car Wash Association, both declined to participate in interviews or provide comments. Ultimately, the enduring affinity for cars and car washes among consumers remains unabated, fueling continued growth in the industry.