Hammer Time: The Next Flat Tax
I hate politics. Neither side of the extremes can do math and everyone in between ends up paying for it all. I don’t care if you’re a Rep, Dem, Lib, Con, Tea, or the apathetic majority. Putting faith in political solutions when it comes to money is never worth the effort. With that said, my home state of Georgia is money crunched. They see an asset worthy of their financial portfolio and yes, it is the automobile.
Georgia and New Hampshire are the only two states that don’t collect a tax for ‘individual to individual’ transactions. You buy a Camry for ten grand in Atlanta from a fellow down the street? That’s all you pay for now. Get one from the dealer down the street? It’s more. An extra $600 to $800 (6% to 8%) depending on your county’s sales tax rate. Does that put the dealer at a disadvantage? Yes, but that’s not close to the whole story.
The big issue for most dealers is not the one time ‘individual to individual’ transaction. But the ‘curbstoner’. When you drive down the road and see the same corner spots hawking vehicles for sale, that’s curbstoning. Individuals who buy vehicles at public auctions or privately and then try to find whatever well traveled space is available to sell it on the cheap.
Officially you are supposed to sell no more than five vehicles a year as an individual in Georgia before you have to get a dealer’s license. Most states have the same policy, and it’s never cheap. The running cost of a dealer’s license in Georgia when you throw in an office, insurance, a surety bond, and other associated costs is usually at least ten grand. That’s serious money for most folks and not too surprisingly, most small-timer’s want to avoid it. However when ten cars turns to twenty, which turns to fifty… the laws of unintended consequences tend to go haywire. You end up with a cottage industry where cars by the thousands every week are sold this way tax free.
The car that blew up down the road gets bought on the cheap, minimally fixed up, and re-sold on the same side of the road. Used tire stores buy wrecks that are then fixed up with minimal safety standards and get ‘for sale’ signs on their windshields. All of it is under the table. Before you think I’m exaggerating here, I have both versions of this within five miles of my dealership. As the guy who is stuck paying for the ‘free riders’ and dealing with the rep these folks give to my work, it ticks me off.
So now we have another “Major Tax Reform Bill” at our state’s Capitol. It is House Bill 387 and it will raise about $300 million in taxes if it’s passed. A flat sales tax that would level out the playing field when it comes to purchasing a vehicle and it will help close yet another record deficit . But many of the folks in Georgia who buy their vehicles privately will end up paying more. Is it fair?
I don’t know. I realize that this automotive version of a fair tax capitalizes on John Q. Public. But I also know that you can’t have all the benefits of a stable democratic government without paying for the cost of it. Right now we’re about $13 trillion plus from that reality. To me the ‘income’ side of taxation is always up for debate. The ‘goods and services’ side? Not so much. I think a fair and flat tax on that end is reasonable. I think it should pass.
Does supporting this bill make me the bad guy? Obviously I am the ‘special interest’ in this case. But am I right? And if I’m not right… who else is wrong?
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Gotta pay for the roads somehow, and a vehicle tax seems as reasonable a way to do it as any other. I'd do it based on weight or axle loading, but that's just me. Here in California, you're technically required to pay "use tax" (aka sales tax) on ANY private party sale - not just vehicles. But aside from houses and cars, not many of the things that change hands privately are worth the effort for the state to persue collection. So it never gets paid, and most people aren't even aware they're supposed to pay it.