By on March 14, 2009

That’s the annual Peach State tax on cars. So eliminating it’s a good thing, right? As someone who can’t find their way around a calculator, I depend on The Atlanta Journal Constitution to tell me if the proposed elimination of a yearly property tax on autos works is a good thing or a bad thing. Only I’ve read the article and I’m still not sure.

Backers of a state House plan to ax the annual birthday tax on cars are confident most Georgians support what they’re doing.

But the bill they passed Thursday, which replaces the current taxes on cars with a big one-time title fee, is getting mixed reviews. Gov. Sonny Perdue, who would have to sign any birthday tax legislation lawmakers approve, said Friday that parts of the plan appeared “convoluted.”

“I’m still trying to digest the purposes of that, of how it all would work,” the governor said.

Not to coin a phrase, no shit.

Under the proposal, Georgians would continue paying the annual property tax on cars and trucks they now own. But, starting next year, they would not have to pay property or sales taxes when they buy a new or used car. Instead, they would pay a title fee of 7 percent on the value of the car, up to $2,000 [the title fee, not the value of the car].

William Morie, president of the Georgia Automobile Dealers Association, said the change could generate sales from people who don’t want to continue paying property taxes on cars.

“People might do the math and figure out they are better off buying a car,” Morie said.

In fact, Rice, the Gwinnett County lawmaker, is so sure it will spur sales when it takes effect next year that he’s worried that people might wait to buy cars until then.

“We’ve got some issues that have to do with what happens in the interim between July 1 and January 1,” Rice said. “We’re not trying to kill all the dealerships in Georgia for the next six months. They’ve got enough trouble as it is.”

Huh?

While dealers might be helped, the bill would initially increase the cost of buying a car from a private individual. Under the bill, people who buy a car from a family member, neighbor or someone who placed a classified ad would have to pay the new 7 percent fee on the car’s value.

That has raised a red flag for some Georgians questioned by The Atlanta Journal-Constitution about the proposal. Lawmakers said there were about 900,000 person-to-person car sales in Georgia last year.

David H. Underwood, 55, a photographer from Lilburn, said he would not support a tax on private sales. “New taxes during this bad economy will only hurt the recovery,” he said.

Calvin Stevens, 62, a small-business owner from Decatur, called it, “One of the biggest tax increases to hit Georgia consumers in a very long time.”

Ah. And it gets worse. I think.

Under the bill, someone buying a $25,000 car would pay a $1,750 title fee. If they paid a 7 percent sales tax, the cost would be the same.

The purchaser of a $75,000 car would pay $2,000 under the House proposal. If they, instead, had to pay a 7 percent sales tax at a dealer, they’d fork over $5,250.

Charles Wike, 41, of Cumming said the proposal isn’t structured equitably.

“While I hate paying the tag tax, I do not feel this fairly represents the average person,” he said. “Capping the cost at $2,000 means those who purchase an expensive car don’t pay a fair share as those purchasing a cheaper car.”

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45 Comments on “Georgia Contemplates Ending “Birthday Tax” on Cars...”


  • avatar
    Landcrusher

    Actually, a flat percentage doesn’t bother me. I see it as the proper balance between progressivity and ACTUAL fairness.

    However, I have to take issue with the cap being labeled as unfair. Why? What is the tax supposed to be for? Why should someone pay more taxes just because he bought a more expensive car? A flat rate isn’t “unfair”, it’s just not progressive.

    No matter what side of the aisle you are on, no one should support all this newspeak. It’s bad for everyone except the press and the government.

  • avatar
    Don Gammill

    Hey Robert, do you see now why relying on the Atlanta Journal for anything is generally a bad idea?

  • avatar
    Strippo

    It’s a regressive change in the current law and is not otherwise revenue neutral because it taxes private sales. In other words, it’s very regressive at a time when Georgia’s economy is even worse than the nation’s. Having said that, those buying new in the Atlanta area will benefit from paying a one-time fee instead of sales tax/residual ad valorem taxes. So, you know, screw the poor.

  • avatar

    Is there currently no sales tax on cars in Georgia?

    How high is the current property tax?

    Whatever the numbers are, I have a hard time believing that this will stimulate sales. Spending more up front to save money down the road isn’t the American way.

    And even if there is a one-time bump, once people buy these cars they’ll have less reason to buy another instead of holding onto it.

  • avatar
    rodster205

    That’s O.K. Georgia, keep sending all those well maintained (thanks to inspections) dirt cheap used cars over to Alabama… your residents take the depreciation hit and then don’t want them as used. We’ll keep buying your lottery tickets also, sounds like a fair trade to me!

  • avatar
    krhodes1

    One thing also often overlooked – if the current property tax is based on the value of the car, the tax is deductible from Federal income tax for those who itemize deductions. That new title fee will not be. Maine is the same way, I deducted over $700 in excise taxes on my cars this year. Saved me over $300 in income tax. Of course the fact that I paid over $700 tax on my cars when the newest of them is a 1995 is a little irksome….

  • avatar
    Steven Lang

    A few notes here…

    Private party sales are NOT taxable as it applies to sales tax so long as the seller is an individual. If you buy from a dealer, you do have to pay sales tax.

    Everyone pays an ad valorem tax, a tag fee, a title fee, and a registration fee.

    This is an incredibly stupid idea… except for one thing. It will encourage people not to buy cars at all. Those who are ‘keepers’ will come out ahead.

    On the flip side it will absolutely screw those folks who buy low end cars and know little to nothing about maintenance. They will be screwed big time.

    As in most states, Georgia is very reliant on revenue that comes from car sales. Unfortunately in Georgia’s case, the state is going to suffer greatly from the current recession and as a result any half-baked idea is being given consideration by the paid-for politicians.

  • avatar

    Steven,

    The key point here, which you likely grasp but this isn’t clear in your comment, is that by replacing a sales tax with a title fee private party sales will essentially get taxed, it’s just not called a tax.

  • avatar
    pista

    American taxation doesn’t interest me in the least but what a fantastic cake!

  • avatar
    MadHungarian

    When I moved to Georgia 4 years ago I was surprised (pleasantly!) to find there is no sales tax on private party car sales. That’s not true everywhere; it wasn’t in PA where I used to live, and in fact PA could tax you on the book value of the car even if you claimed to have paid a lot less.

    This change will in general penalize private party buyers, but who it really hits hardest are people who buy in private party transactions AND turn their cars over often. I happen to have my three car tax receipts sitting here. For the two newest cars (I’ll get to the other one in a minute), the annual tax is *roughly* one and a half percent of what I consider to be the real world current market value of the car. The assessment goes down each year as the cars depreciate (and thus the tax goes down as long as the millage is constant).

    So, if I am paying tax at 1.5% per year on a DECLINING value, it will take more than 5 years before I will have paid as much tax as if I paid 7% up front on the value as of the purchase date. If I factor in the time value of money plus the lost federal deduction at my marginal rate, I would probably have to keep a privately-bought car eight years before I paid as much in “birthday tax” as I will pay up front under the new system. I don’t usually keep a car 8 years.

    Now comes the really wacko part. That third car? It’s a 1974 Cadillac Fleetwood Brougham. Not of museum piece quality, but a nice #2 condition car that gets awards at club meets. However, it’s assessed value for tax purposes os $100, and the annual tax is $3.75. Evidently, whatever “book” Georgia uses to determine taxable values doesn’t go back that far, and so the system defaults to a $100 value! Nobody asked me to declare a value when I registered the car. Imagine how much revenue they would be losing if I had a ’59 Eldorado. Of course, collectible car sales are much more likely to be between individuals, not taxed now. So, Georgia car collectors, take notice, Sonny’s got his hands in YOUR pockets!

  • avatar
    kamikaze2b

    As screwed up as my state is (Oregon) thank god there is no personal property tax. I never understood how I could be taxed on the initial purchase (sales tax) and then again every year thereafter.

    We’re still too retarded to pump our own gas though.

  • avatar
    NICKNICK

    Taxes in general upset me, but the property tax is the most insidious. You’re income-taxed when you earn the money, you’re sales-taxed when you spend it, and then you’re property-taxed for the fruits of your labor?

    and what’s this “fair share” business? I never understood how a single guy with a good job has a “fair share” greater than an average family. Who’s using more resources and state services?

    When I complain about taxes, people often bring up the police. “who would pay the police?” in my little piece of the country, the police spend all of their time in the bad neighborhoods where, guess what, people are tax money recipients (welfare). If the bad guys get out of their neighborhood and something happens in MY neighborhood, the police that I PAY are ten minutes away at best.

    Personally, I’d rather save my tax money and use it to pool with my neighbors to hire Blackwater.

  • avatar
    Dynamic88

    A flat rate isn’t “unfair”, it’s just not progressive.

    Some would say that’s what makes it unfair. You’re entitled to your opinion, but that’s all it is – an opinion. There’s nothing about a flat tax which is “logically” fiar. Fair is what people think it is.

    Why should someone pay more taxes just because he bought a more expensive car?

    Why should someone pay the same taxes, even though he bought a more expensive car? IOW, why should there ever be a cap? He’s paying the same %, but he has a higher purchase price – naturally that means paying a higher total. If you buy the $150 per pair running shoes you’ll pay more sales taxes than I will, if I buy the El-Cheapo pair for $25. You figure there should be a cap so you don’t pay more than I do ?

    In MI we pay an annual registration fee. I suppose you could call it a tax – pay it or don’t drive. I pay less than $200 for 3 cars.

  • avatar
    golden2husky

    Under the bill, someone buying a $25,000 car would pay a $1,750 title fee. If they paid a 7 percent sales tax, the cost would be the same.

    The purchaser of a $75,000 car would pay $2,000 under the House proposal. If they, instead, had to pay a 7 percent sales tax at a dealer, they’d fork over $5,250.…

    Good reason as to why a sales tax is the way to go and the “property” tax should be abolished. You spend more, you pay more, but percentage-wise, the burden is equal. As it should be. Once the car is yours, why an annual tax? Yearly registration fees make sense in that to cost of your state’s DMV is being partially covered by those who use the services.

    Dynamic88, you are correct in stating that fair is what people this is fair. If the tax becomes less as the cost rises, naturally those who buy the more expensive products will think its fair when it is anything but. My opinion of fair is that everybody pays an equal percentage, no matter what the cost is. Which is why sales tax makes sense. To be fleeced on a yearly basis for owning a car is ludicrous. A car is not a house, where the occupants put a demand on services. A car’s “demand” should be considered “addressed” by the state’s levy on fuel. The more you drive, the more you use, the more you pay. That seems totally fair to me.

  • avatar
    Strippo

    Steven Lang: This is an incredibly stupid idea… except for one thing. It will encourage people not to buy cars at all. Those who are ‘keepers’ will come out ahead.

    That’s true in the long run, but current “keepers” will continue to pay the birthday tax unless and until they transfer their vehicles to a family member to trigger the one-time fee.

    Also, high end buyers come out ahead relative to current law – so much so that dealers worry that they won’t be able to move metal until the new law goes into effect.

    See http://legislativeaccountability.org/2009/03/15/georgia-legislature-wants-to-tax-private-car-sales/

  • avatar

    Michael Karesh
    Is there currently no sales tax on cars in Georgia?

    There is definitely a sales tax on cars and it varies from county to county.

    rodster205
    That’s O.K. Georgia, keep sending all those well maintained (thanks to inspections) dirt cheap used cars over to Alabama…

    Georgia doesn’t have a state vehicle inspection, as verified by the number of cars with burned out lights, bald tires and broken exhaust systems on the roads around here. However there is an annual smog inspection in the metro Atlanta area.

    Steven Lang :
    Everyone pays an ad valorem tax, a tag fee, a title fee, and a registration fee.

    Actually the ad valorem tax varies from county to county, and some counties don’t have one. That’s where the big ding comes at tag time, as the ad valorem tax adds hundreds (or thousands) to the price of the tag renewal.

    The biggest problem with the way Georgia handles car tags (other than the outrageous ad valorem taxes) is that, unlike other states I’ve lived in, the tags and taxes are due on the birthday of the registered owner instead of the anniversary of the purchase/registration date. That’s where the “birthday tax” comes in. You get an annual birthday greeting from the state that will end up digging deep into your pockets.

    If you own more than one vehicle it adds up quite rapidly. The only way to get around it is to register the vehicles in someone else’s name. To keep from having to pay an outrageous bill right after Christmas (my birthday’s in early January), we’ve titled some of our vehicles in my wife’s name.

    If the state was really serious about this, they’d eliminate those ad valorem taxes that annually penalize someone just for buying a newer car.

  • avatar
    GS650G

    States like PA impose a 6 or 7% sales tax (philly is 1% higher) on the sale price regardless of who sells it. Most used sales between people include telling the state the car sold for far less, it’s a common negotiating tactic used to close the deal. Wrong? Not as wrong as the state collecting sales tax on a PA titled vehicle they already taxes when it was sold and titled before. Everytime it changes hands they get a check.

    In DE there is a 2.75% tax masquerading as a doc fee on vehicles brought into the state. If you buy a DE titled ride and keep it in DE they don’t get a taste. DE has no sales taxes.

    Plenty of people will rail about how we need to pay for roads, civic duty, blah blah blah. I’m sure every state drags enough revenue in from income, business, sales, fees, and other taxes to build and maintain roads if that was the FIRST priority. But buying votes with money for other nonsense means we drive over potholed roads and rusty bridges until an emergency is declared and new revenue must be found.

    Here is a simple solution for GA. Eliminate it all together and steer money from social programs into roads, rather than the other way around.

  • avatar
    GS650G

    kamikaze2b :

    We’re still too retarded to pump our own gas though.

    And New Jersey too.

  • avatar
    Dynamic88

    The biggest problem with the way Georgia handles car tags (other than the outrageous ad valorem taxes) is that, unlike other states I’ve lived in, the tags and taxes are due on the birthday of the registered owner instead of the anniversary of the purchase/registration date. That’s where the “birthday tax” comes in. You get an annual birthday greeting from the state that will end up digging deep into your pockets.

    Works the same way in MI. My wife’s car is registered in my name, though there is no reason it couldn’t be in her’s. My truck is in my name, and my son’s car is in my name so that his insurance will be cheaper. So in August, I get to renew the registration on all 3. The way I look at it, I’ll have to renew all 3 at some point during the year, so having them expire on my birthday works just as well as any other time of year. Personally, I’d rather have one big bill than 3 smaller ones coming in at other times.

  • avatar
    Steven Lang

    This would be the simplest way of doing it…

    1) A one time state tax based on a set value of the type of vehicle you purchase.

    2) A flat tax for the annual registration of that vehicle.

    I also believe that these things can and should be done online… in most cases.

    If we did this in Georgia (and elsewhere), it would literally save tens of millions of dollars for the taxpayers. You wouldn’t need a ‘Title & Tag’ office with the usual number of employees in all 159 counties in this state, and transferring vehicles would be far easier and less time consuming than it is today.

  • avatar
    John Horner

    It sure sounds like Georgia’s tax system is a convoluted mess. An annual tax due on the owner’s birthday? What idiot came up with that? Move to Georgia the day before your birthday and you suddenly owe a pile of taxes?

    Sales tax on dealer sales of vehicles, but not on private party sales? Wow, that is dumb.

    A big tax at title transfer time, in theory eliminating the ongoing, but smaller, birthday tax? Gosh, that is going to screw over car sales.

    Here in California the taxes on cars are, by comparison, straight forward. All vehicle sales, new or used, private or dealer, are subject to sales tax. Additionally, the annual registration fee is based largely on the vehicle’s value and is a recurring fee. Both the sales tax and the value based portion of the annual registration fee are federally tax deductible depending upon the person’s particular tax situation. The annual fee is presently set at 1.15% of the vehicle’s value. Said value is initially whatever you paid for the vehicle and then is depreciated on a straight-line 11 year schedule. It is due on the anniversary of when you first registered the vehicle in California … not your birthday!

  • avatar
    grifonik

    One thing I don’t think Ga is considering is how much revenue could be generated from a LOWER tax right off the bat. As long as the tax is lower than neighboring states, people will cross state lines to buy the (especially new) cars.

    Cobb county has a 2% less tax than Fulton (Atlanta area) County (5% vs 7%) does and that is probably reason #1 why Cobb county has nearly three straight miles of car dealers off of Cobb Parkway.
    How many does Fulton have? Seen quite a few of the <$5K type crap car dealers sitting on <1 acre lots. The difference that 2% makes is amazing. Sometimes less IS more.

    Sources:
    http://www.georgiafacts.net/net/location/county.aspx?countyid=13067

    http://www.georgiafacts.net/net/location/county.aspx?county=Fulton&s=0.0.0.3013

    @NICKNICK

    I’ll second that blackwater comment. You officially rule.

  • avatar
    jackc10

    The revenue from the ad valorem tax on vehicles in Georgia goes to the cities and counties.

    Reducing it or cutting it down does not impact State revenues at all, although the legislation proposed seems to have overlooked the annual $20 fee, regardless of value, a portion going to the state.

    The State is not proposing a way for the cities and counties to make up for the loss of revenue.

    All studies show Georgians’ total tax bills are low on a nationwide basis. It is not as if we are being taxed out of home and property.

    This is another half baked attempt by the State legislative leadership to cut taxes that affect local government and its citizens, not the State Government.

  • avatar
    Landcrusher

    Dynamic,

    I suppose that “fair” is a pretty non specific word. It has a lot of meanings. However, I am one of those old fuddy duddies (sp?) that believes in absolutes when it comes to justice. I am also a stickler with not letting people change the language.
    If fair is an opinion, then, according to you, I just stated mine. So, why the need to point that out? Perhaps because what I said seems correct? Contradictions always raise up when you start to change the language.
    If the folks who are paying the progressive rates are willing to go along, then THAT is fair. Otherwise, it’s not. I think what has happened is that since JFK and Ronald Reagan pointed out the problems with overly high rates, the people paying the high rates have started to be more bothered by them. I also think the only people actually paying those rates are those in the real middle, not those on top or on bottom.
    No sense of fairness allows for everyone at your office to sit around and get paid while 50% of people do the work. Why does that seem fair at a national level? There is something inherently fair with user fees to those on the left, except when it comes to people who can’t “afford” it. They never seem to think about the idea that maybe those people don’t “need” it or that they are sending a message that no one has to pay if they make bad economic decisions, so why bother being responsible.
    What we have now is a system where those on the very top use wealth to stir up the near majority on the bottom to raise rates on those who might threaten their power. The result is higher marginal rates that the truly wealthy don’t pay anyway.
    It came to my attention today that the present administration has actually put into writing their belief that those over 250k have been unfair to those below them. This is hideous, disgusting, and unfair. In the President’s wide populist net, he has caught all sorts of doctors, small businessmen, sales people, and middle managers who have lived by the rules, worked hard, and done nothing wrong. Most all of them worked for years at ridiculously low hourly rates of pay investing in their own futures. Shame on him.
    If he wants to rail at CEO’s over bad leadership and management, then he may do so. They took up the mantle, and that means they take the criticism. Instead, he villifies them while punishing ALL the people who provide the very wealth he wants to redistribute whether they have done anything or not. In the process, he is reinforcing the idea that anyone who is wealthy must have cheated which increases his administration’s power and support.
    I have a better idea. Let’s get to the really nasty stuff – power. The millionaires have to pay people to do their bidding, but the government can mandate theirs. The voter has such little power, while those in office have so much. They should share! I will be happy to show up at Congress and get my day to vote. They have so many votes, and I so few. It’s unfair, no?

  • avatar
    jackc10

    The reference to buyers crossing state lines to save on sales taxes might not always be the case. Alabama sales tax on a new vehicle is between 2 and 4%.

    That is higher than any location in Georgia.

    I was in Centre, Alabama yesterday. The Ford dealer on the by pass has been closed for about 6 months. The building might be 2 years old.

    30 miles away the Rome, GA Ford dealer is still
    in business.

    Another Georgia note:
    The reason for all the dealers on South Cobb Parkway in Marietta and Smyrna has nothing to do with any sales tax differences with Fulton County to the south. It has everything to do with the march of development and zoning. The dealers followed the buyers to where land was available.

  • avatar
    Strippo

    The State is not proposing a way for the cities and counties to make up for the loss of revenue.

    Actually the “7%” is made up of a 3.64% local title fee and a 3.36% state title fee.

  • avatar
    HankScorpio

    Concerning crossing state lines to buy a vehicle…

    I bought a vehicle in Florida, from a dealer, while living in Indiana. The dealer processed it as an Indiana sale with Indiana sales tax and had the title mailed to our local BMV office.

    I live in Illinois now, and if you buy a vehicle out of state and do not have it titled out of state for 6 months or more, you owe IL sales tax (9.5% in Cook County, 10.25% if you live in Chicago) when you get tags in IL.

    For the record, IL charges sales tax on dealer and private party sales, then a tag fee independent of vehicle value every year (~$85). Indiana charges sales tax on private and dealer sales and then an excise tax based on the value of the vehicle every year. The excise tax is limited to a set amount once the vehicle is 10 years old. Also, revenue from the Indiana lottery halves the excise tax.

  • avatar
    Landcrusher

    Golden,
    I must disagree with you strongly. What does this tax money go for? If it goes for highway funds, then why should someone buying an Elise, pay more than someone buying a Tahoe?
    OTOH, if this is going to the general fund, then I suspect very few people buying luxury cars really think that it’s more fair to have a flat fee, yet you want to villify them with a broad stroke. I can tell you that the doctor who will likely save your life one day may have chosen another path if he realized how he was going to be treated by the hate and tax schemes. Not enough of them do it out of a passion for medicine to serve all our needs.

    Everyone,
    I really want to know what public good is promoted by taxing cars on their value? Forget about “fairness” for a second. Let’s think about results.

    Taxing cars on their value is a disincentive to buy new cars. So, the state is saying that we would rather you buy a new tv, or clothes, or more caviar than buy a new car? How do the folks who make cars feel about that? Newer cars pollute less, are safer for everyone in the community whether in them or hit by them or avoided by them, but we want to tax them higher? Mostly, it’s the cheapest, oldest cars that pollute the most yet this policy incentivises you to buy them instead of a newer, greener car.

    Now, we can disagree about economic “fairness”, but does it have to be the overriding priority on every policy? Is that a good thing? What am I missing?

  • avatar
    Guillaume9

    There is no Peach Tree state.
    Georgia is the PEACH state.

  • avatar

    Guillaume9

    Doh. Text amended.

  • avatar
    Dynamic88

    If fair is an opinion, then, according to you, I just stated mine. So, why the need to point that out? Perhaps because what I said seems correct? …

    No, just the opposite. It seemed incorrect, to me. Your statement of what’s fair, apparently strongl felt, doesn’t make it fair. (Nor is my opinion of more value than yours)

    Just as I said in my running shoe example above, we both pay the same rate (a flat tax) but if you buy more expensive shoes, you’ll pay a higher total amount of tax. That really seems very fair to me.

    What you are really saying is that a flat tax is fair, up to some arbitrary maximum ($2K in GA) and after that, it’s fair for someone buying a very expensive car not to pay any additional tax.

    If GA implements this bill, it would impose a 7% fee, based on the car’s value, but capped at $2K. Someone buying a new Jag for $75K is going to end up paying the same amount as someone who bought a well equipped F-150. You may think this is fair, but you should not be at all suprised if some of us do not.

    We aren’t even talking about progresssive tax here – both buyers are being asked to pay the exact same flat rate – 7%. But the Jag owner sees his total tax bill capped when the value of his vehicle exceed $28,572 (2000/7%). It’s not at all obvious, at least to me, that there is something inherently unfair about asking the Jag buyer to pay the same 7% that everyone else pays, on the full value of his vehicle – Just as the F-150 buyer pays more in total (but the same 7% rate) than someone buying a Chevrolet Aveo.

    Of course, if the people of GA think it’s an important social goal to give the well-to-do a tax break, then so be it.

  • avatar
    Dynamic88

    OTOH, the actual cost to the DMV of re-registering cars annually is probably identical, so maybe the “fair” thing would be a single registration fee w/o regard to the vehicle’s value.

    Now, we can disagree about economic “fairness”, but does it have to be the overriding priority on every policy? Is that a good thing? What am I missing?

    No, it doesn’t have to be the overriding priority all the time.

    We already do, for example, give tax breaks for zero emission cars. The poor have almost no chance at all of taking advantage of this, but it strikes many as “fair” in that it helps accomplish the goal of making the national fleet a bit greener.

  • avatar
    Landcrusher

    Dynamic,
    Okay, lets drop the semantics and agree to disagree on whether there is an objective or ideal concept of fair. It won’t be fun without sharing a beer at the same time.
    So, you picked what seemed to you to be a good example. And I will point out that I don’t have a problem with flat rates because they are practical and mostly fair. However, here is the land mine you just stepped on:
    For more years than I can say, my mother has been spending many times more money on shoes than you or any of the women in your family likely have. She is no Imelda Marcos either. You see, she has an odd shaped foot. When she was a child, her shoes cost as much as the rest of the family’s (she had 4 sisters). Her father made her feel bad about this every time they went to the shoe store.
    She pays more sales tax because she simply can rarely find a shoe for less than a hundred dollars that fits (not to mention many, many hours spent hunting for them). How fair is that? It’s really not a big deal unless someone wants to make a big deal about how she is rich and ought to pay more. She is not rich, and she does NEED shoes. She doesn’t NEED a car, a TV, a manicure, fast food, a large home, or lot’s of other things that the welfare state seems to think people “need”. However, she needs designer shoes because she would get laughed out of the office if she showed up in the only other kind of shoes that fit her – Redwings.
    Fair is tough to implement in taxation. It doesn’t help when you start with the idea that progressive everything is “fair”. How about starting with the idea that fair is fair, and that a flat rate makes sense in many cases, and that progressive rates should be very carefully applied with diligence and only when it makes sense, and NEVER EVER to level the playing field. If the field is uneven, fix the field, don’t have government rewrite the score after the game, or the players will stop trying.

    “In the news today, another zero-zero basketball game played in front of empty seats. The players got drunk on vodka, and there were several DUI’s afterwards.”

    So, what I am saying is that if the tax is a user fee to pay for roads and registration, then capping it is fair. What that does is NOT allow the luxury buyer to pay less than his fair share, it instead has everyone subsidize the folks who buy less expensive cars. My real preference is for a gas tax to pay for all road transport related government costs. Make special cases for special cases after that.

    If this is a wealth tax, as opposed to an income tax or user fee, then it should be an uncapped flat rate rather than a flat fee. If you really want an out for poor folks, then don’t tax resales, or don’t tax below a certain value. Then, when some demagogue shows up wanting a luxury tax on top of the flat rate, we should have HIM villified for being a first rate ass who is dividing the country for his own personal gain. The luxury buyers will already be paying double or more for owning a nice car, and the people who make those cars are going to be the victims of such rhetoric, not the rich folks. Not to mention the people who are being sold a false premise – that earning is evil.

  • avatar
    Dynamic88

    So, what I am saying is that if the tax is a user fee to pay for roads and registration, then capping it is fair. What that does is NOT allow the luxury buyer to pay less than his fair share, it instead has everyone subsidize the folks who buy less expensive cars. My real preference is for a gas tax to pay for all road transport related government costs. Make special cases for special cases after that.

    So the problem is the poor don’t pay enough taxes? Sorry, I’m not with you on this.

    The luxury buyer is definitely paying less than his “share” if we think of “share” as 7% of the price of the car, which is exactly what “share” means under this legislation, until we reach $2k. The GA law redefines “share” once $2k has been paid. I don’t see the “fairness” of this.
    Again, how is it fair that the F-150 buyer pays a higher fee than the Aveo buyer, but it’s unfair when the Lexus buyer has to pay more than the F-150 buyer?

    I don’t have a problem with a single fee for all users. The actual cost of registration is some paperwork on the part of DMV staff, and a sticker to put on your plate. I’m sure the real cost is the same for a Bently as an Aveo. But of course, the problem is that it isn’t about covering actual costs (which would amount to what? -$3 per vehicle?) It’s about raising revenue for the state. That’s why it’s based on the value of the car.

    My wife has the same problem as your Mom. Nothing much can be done. Some individuals will just incur greater expense. We could of course set up a system of waivers for those who can demonstrate financial need.

    I would very much enjoy having a beer with you some day. Maybe we’ll get the chance.

    If this is a wealth tax, as opposed to an income tax or user fee, then it should be an uncapped flat rate rather than a flat fee.

    My understanding is that it IS a flat rate (7% of the value of the car). I’m confused now because you seem to be saying the cap should be eliminated. Or maybe I’ve misread you.

  • avatar
    Landcrusher

    My point is that the cap may or may not be fair. If the purpose of the registration fee is to fill the coffers for general use, IOW, it’s a tax on wealth, then capping it is silly.

    OTOH, if the registration fee is to pay the buyer’s share of some specific cost related to auto and transport (obviously more than just the paper work and tags, let’s say it’s to cover the cost of the highway patrol for instance) then it could make sense and not be unfair.

    Let’s say that the EQUAL share by vehicle of the Highway Patrol is $1600. Now, let’s say you want to have everyone pay that as a flat fee. Well, it’s pointed out that may be rough on folks on fixed incomes who like having a car under warranty, rarely break the law, and don’t drive that much. Okay, so for that and other reasons, we fix it so that those buying cars under say 20k, they pay less and less, but those over pay a bit more to make up for it, but we don’t want to be unfair to the guy buying the 100k mercedes because in reality, he has no more responsibility to help the fixed income people than the people buying 50k mercedes, and, he may be one of those folks on a fixed income in another 20 years himself! And, we also don’t want to ruin the sales of cars over 50k because all those people want to keep their jobs, and are not deserving of having the government attakc their livelyhoods.

    As I always say, a gas tax would be even better. If you have to subsidize the truly needy, well guess what, we already do. Add to their subsidy to offset the gas tax.

    Either way, in the end, so long as there isn’t one group using undue power to attack another then it will likely be percieved as fair. Would you not say that at some point progressivity is both unfair and unproductive? If so, then we are arguing over the margins more than the principle.

  • avatar
    Landcrusher

    Maybe RF will hold a fund raiser and we can all get together for that beer.

  • avatar

    Taxes on property or assets are the most wealth redistributing taxes. As was pointed out, property tax is tax on wealth that’s already been taxed at least once.

    Why should the state tax certain assets (real estate, cars in some states) and not other assets like the principal in financial accounts. If I choose to keep my money in stocks or bank accounts, the state won’t tax it but if I put that money into real estate or a car, the state claims a partial proprietary interest in my property.

    I’m beginning to think that sales taxes are better policy than income and property taxes. While there are constitutional issues regarding an income tax, a sales tax is closely analogous to a tariff on imports, one of the federal government’s original sources of revenue.

  • avatar
    Steven Lang

    OK, does ANYBODY disagree with what I wrote? It’s a pain to write a sensible idea and never get feedback. Next thing you know I’ll be dealing with political issues that make the concept of ‘right’ or ‘wrong’ a distant memory.

    Oh wait, what’s this about again?

    That’s right, taxes. [email protected] A few quick notes…

    1) The state of Georgia already gets most of the sales tax. In Cobb they get 4% out of the 6% sales tax. In City of Atlanta it’s 4% out of 8%. In Dekalb it’s 4% out of 7%. In otherwords the state always gets their 4%…. even if it’s bought in Alabama (which some would argue really is the same state as Georgia).

    2) A ‘birthday’ tax is quite possibly the most idiotic version of a tax I’ve ever seen in Georgia… and that says a lot.

    3) Sales tax in Georgia is based on where you live. Not where the purchase took place.

    Our state is in far worse shape than anyone in Atlanta likes to admit. Unfortunately Georgia’s government may be one of the most easily bought anywhere thanks to the low salaries given to elected public officials.

  • avatar
    Strippo

    Our state is in far worse shape than anyone in Atlanta likes to admit.

    There are plenty of us ITP who think we’d be better off in the middle of Mississippi than in the middle of Georgia. The faux Bible thumpers running this state are doing their best to serve Big Business while screwing the little guy and paying lip service to an abortion-hating, alcohol-shunning Baby Jesus who presumably turned water into wine purely as a tree-hugging biofuel experiment. Having said that, I don’t disagree with your tax proposal.

  • avatar

    We have what Steven suggests in Florida. We pay our normal sales tax at the time of purchase for both private and dealer sales and we pay a 32 dollar annual registration fee. Jesus I never knew other states taxed you annually on the vehicles worth. Thats insane in my opinion.

  • avatar
    geeber

    In Pennsylvania, we pay 6 percent sales tax on the negotiated price, and an annual $36 registration fee for all passenger cars. After reading about the Georgia tax scheme, I’ll not complain about this ever again…

    Dynamic88: Some individuals will just incur greater expense. We could of course set up a system of waivers for those who can demonstrate financial need.

    Or, one could take the approach used by several prominent Democrats, and just not pay those pesky taxes at all…and no one will apparently know until we are nominated for some important position.

  • avatar
    nikita

    “I never knew other states taxed you annually on the vehicles worth. Thats insane in my opinion.”

    Thats California. Gov. Davis was recalled partly because of the outrage over raising the Vehicle License “Fee”. to 2 percent. Arnold lowered it to .67 by executive order. Now he agrees with raising it again to 1.15 percent.

    How many states also charge a weight fee on commercial registrations, regardless of the value or mileage driven, or even if they are actually used commercially? A pickup used only to take the kids to school and get groceries gets hit with an extra $154 a year if the Unladen Weight is 5001-6000 lb. A Suburban that does the same job doesnt pay. So, an old truck used once in a while for going to Home Depot or the dump costs a bundle to register each year, even if its hardly worth anything.

    There is no “non commercial” or “farm truck” exemption.

  • avatar
    AWD-03

    Guillaume9 While there may be no peach tree state, there is a peachtree city.

    Having lived in IL, NY, FL, and GA where I had to get vehicles registered, I would say I prefer IL’s setup. You register your vehicle every year and pay $50. Done. Sales tax at the actual sale was a bit high, but at leat I didn’t live in or around Chi town.

    GA’s ad valorem sucks every year. It really makes me not want to buy new. At this point I still haven’t. I bought two used cars here so far.

  • avatar
    nfriess

    I think something is being overlooked. The Title tax is 7%, this is “in addition” to the 7% sales tax, not instead of. So right off the bat, you will pay a total of 14% of the purchase price, with the Title tax not exceeding $2000.00.

    Here’s the kicker, most people finance cars, take that up to $2000 and mutliply it by the 8% interest paid on the car loan, compound it for 5-6 years, and now that tax just came to approx. 900.00 in interest. The only people making out are the tax collectors and the banks….. as usual….go figure…..

  • avatar
    nfriess

    Ohio pays a 7% sales tax. Period. License plates are approx. 40.00 a year. period,, no more tax. If you sell a car person to person, you pay 7% on the selling price….. GA is taxing its residents to death…..Ugggghhhhhhhh!

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