I think that arson should legalized on the federal level

You absolutely should be free to burn any piece of your property, as long as it does not harm anyone and damage anyone else's property. However, this is not how "arson" is defined. "Arson" is defined as setting something on fire with malicious or criminal purposes - which, I realise, is a bit of a tautology, but it is clear what the term is supposed to mean.

What is the purpose of you setting your car on fire? Are you doing it to burn down the entire district, hoping that the fire will spread around? Or are you doing it for some other strange reason that concerns no one but you? The intent here is extremely important, as is the likely consequences of the act.

Note that, in case of car/house burning, you need to make sure first that the property actually belongs to you. If you own a mortgage or a car loan on the property, then technically it is the bank's property, not yours, and hence setting it on fire for most reasons can and will be treated as arson, and be prosecutable.

I believe if you are not endangering anyone else or try and collect insurance on said property and the property is soley yours you can burn it.  Although you maybe responsible for the cost of the emergency response agencies that are sent to put it out.