Random Thought of the Day - Car Taxation

[Maitre_Absolut]

if you are paying full tax on your car regardless of how long you keep it, you are doing it wrong.

I sell privately but arrange the transaction through new car dealer purchase, often called an accommodation sale. Its like a trade in except I get retail value on my car since I sold privately. I pay tax only on the difference between sale price and new.

Essentially I get a tax refund on the "unused" portion of prior car and then pay full tax on new, and then roll that forward again. I end up only paying tax on the portion I used. If everyone does that, the government never collects more than 1x tax on a car.

[ASAP]

Originally Posted by dinonz

Wow - you really missed the point. You said:

"Why would car sales tax % even be different amongst states?"

Lets shorten that slightly:

"Why would sales tax % even be different amongst states?"

Why? Because states control their own sales tax that's why! Some don't have sales tax at all (Montana - research titling an RV or Supercar in Montana) and have income tax instead. Sorry but that question REALLY highlights your lack of understanding here.

Something else with registering vehicles in Montana - it circumvents exactly the problem you described. Instead of selling the car, you sell the LLC that owns the car. No sales tax on selling a company, and the new owner doesn't even have to re-title the car - the company still owns it.

Despite it potentially saving me tens of thousands in sales tax, I didn't go down the Montana route. Didn't need any reason for extra attention when driving my cars in Texas on Montana plates.

I think it was perhaps you that misunderstood the point of this thread...

The question (states aside), is why a car sales tax exists in the first place as opposed to a usage tax for the states that have it? In the state of FL, I pay a 7% transaction sales tax on a product that is going to be registered yearly and have registration paid on...

For many states, its still a transactional tax which sounds very unfair and does not exist on any other known product. Oregon has a usage tax which appears to have far more sense.

[dinonz]

Originally Posted by ASAP

I think it was perhaps you that misunderstood the point of this thread...

The question (states aside), is why a car sales tax exists in the first place as opposed to a usage tax for the states that have it? In the state of FL, I pay a 7% transaction sales tax on a product that is going to be registered yearly and have registration paid on...

For many states, its still a transactional tax which sounds very unfair and does not exist on any other known product. Oregon has a usage tax which appears to have far more sense.

I guess I was pointing out that no state at all has "car sales tax" they have "sales tax" or "no sales tax" and it applies "only when sold new" as someone mentioned about Arizona, or "on every sale" as in many states, mine included. But your insistence on "car sales tax" is a bit odd. They are just applying a tax to a sale of an item, and that's sales tax.

The "usage" tax is usually build into the gas price. Use your car more, pay more in gas, and thus pay more in usage tax. NZ does this for petrol (gas) vehicles, but not diesel. Diesel vehicles have to buy "Road User Charges" or something (I've never had one) but you might go buy 1000 miles of usage, and you place that sticker on your window under the registration, and it has the total miles your odometer should read at the end. The reason for splitting the usage from the fuel cost is because diesel is often used in construction and farming equipment that don't use roads.

[shiftdnb]

Originally Posted by ASAP

Yea but thats the thing... it would make more sense if our current car sales tax as it is currently setup went back into the infrastructure used by the cars... i.e. roads, bridges and the like... what does it go to now? god damn social programs and other nonsense our govt spends money on...

it would be more fair to reuse that money in the form of an annual registration tax or some sort of usage tax that goes back directly to the infrastructure.

Dude please...

[vreihen16]

Here in NY State, we pay sales tax every time ownership changes. If you lease a car, you pay sales tax. If you decide to buy out the lease at the end, you pay the sales tax all over again on the buyout amount. Sales tax revenue is divided between the state, county, and in some cases a municipality.

I know that some states (CT and SC for two) have annual property tax on motor vehicles. From what I can tell in SC, the counties set the rates and collect the money for their own use. Interesting to see all of the 1980's/1990's "hoopties" rolling around in some areas down there, I assume because of the low tax rate on a clunker. I'm not certain about how it works yet, but SC apparently also has a state fee on vehicle purchases to pre-pay for road maintenance. If you relocate from out-of-state, they charge a fixed $250/vehicle upon registering it in the state for this fee.

Fuel taxes are another matter altogether. Some states use them for highway maintenance funding. How do electric cars pay for the roads they use? Here in NY State, they write it off as an incentive for people to buy electric cars...for now. The SC method of charging a state fee up front makes more sense for a fair revenue arrangement for both EV and combustion-powered vehicles.....

[RickFLM4]

The simple answer is because states can tax vehicle transactions that way to generate substantial revenue. If they didn’t, they would need to raise revenue some other way - higher sales tax rate overall, higher property taxes, higher income taxes for the states than have income taxes, etc. Vehicle sales, new and used, are generally high dollar amounts and can generate large amounts of tax revenue per transaction. It has nothing to do with fairness. We don’t have state income taxes in FL and I normally lease or hold cars for a long time, so I’m not complaining about state taxes here. Now, homeowners’ insurance is another story...

[FXMR]

Originally Posted by ASAP

So in Ct, at time of purchase do you not pay a car sales tax at a given % ? If so that makes sense, if not... then you're being double played.

Oh you get double played in this swindling state.

In CT you pay sales tax when you register the car at either 6.35% up to a $50,000 purchase price or 7.75% for a $50,000+ purchase price. Keep in mind they go by book value or purchase price - whichever is greater. Score a deal on your new car? Think again, you're getting taxed at market value with no recourse.

Then, each year you get hit with a property tax bill based on the market value of the car. The town (not the state) sets the tax rate at a portion of that year's market value for the car which is a problem in itself. On a 2018 M3, your yearly property tax can be as little as $500 (low tax town such as Greenwich) or as much as $1,900+ (high tax cities such as Hartford or Waterbury).

Try to dodge this by registering in another, cheaper town? Think again, there are literally third party companies that are contracted by towns to drive around at night scanning plates in order to ensure you are registered in and paying taxes in the correct town.

Meanwhile the roads are about as smooth as the moon and other taxes continue to rise. Its disgusting but unfortunately if you're stuck here there is nothing you can do about it.

[dreamingat30fps]

Originally Posted by RickFLM4

The simple answer is because states can tax vehicle transactions that way to generate substantial revenue. If they didn’t, they would need to raise revenue some other way - higher sales tax rate overall, higher property taxes, higher income taxes for the states than have income taxes, etc. Vehicle sales, new and used, are generally high dollar amounts and can generate large amounts of tax revenue per transaction. It has nothing to do with fairness. We don’t have state income taxes in FL and I normally lease or hold cars for a long time, so I’m not complaining about state taxes here. Now, homeowners’ insurance is another story...

I just got the insurance for the house in NC squared away... about $700 for the year for more coverage than I have here.

[RickFLM4]

Originally Posted by dreamingat30fps

I just got the insurance for the house in NC squared away... about $700 for the year for more coverage than I have here.

FL insurance up 40% this renewal. I hear I’m “lucky” because some are up a lot more. Everyone trying to get free roofs driving up the cost apparently.

[Maitre_Absolut]

Originally Posted by vreihen16

Here in NY State, we pay sales tax every time ownership changes. If you lease a car, you pay sales tax. If you decide to buy out the lease at the end, you pay the sales tax all over again on the buyout amount.

are you saying you pay upfront sales tax on full value of the car even when you lease? I doubt it. Pretty sure you only pay sales tax on monthly payment, in which case its normal that you pay tax on buyout since its never been taxed.

[Joekerr]

Originally Posted by Joekerr

ITT we learn that Lemmie works for the gubbermint.

Originally Posted by lemetier

FTFY - "ITT we learn that Lemmie is occasionally contracted by the gubbermint."

Well there you go little buddy - you keep up that positive attitude - after all, even a blind squirrel finds a nut from time to time!

And if you do a terrible job and lose a bunch of money, but do it with a smile on your face and a decent story to sell / spin as to why it wasn't you, you might even get a full time contract one of these fine days!

I'm kidding of course - I have vague ideas about what you might do, gleaning from certain things you've posted, but none of them are likely accurate. After all, most of us enjoy some degree of anonymity.

[paquet]

Originally Posted by Alfisti

Drives me absolutely fucking insane that private car purchases still need to include GST, are you fucking kidding me? In Australia GST only applies to businesses, if i buy a car from you i rightly don't pay GST because you are not a business.

It's an absolutely crazy cash grab, hate it.

Yeah, but taxes are part of the forced sodomy of living in Canada.
The bastards found a way to tax the air with that bloody carbon tax.

(Not being all anti-environmental, just pissed to the tits for yet another bloody tax that is yet another ass blast)

[dinonz]

Originally Posted by Maitre_Absolut

are you saying you pay upfront sales tax on full value of the car even when you lease? I doubt it. Pretty sure you only pay sales tax on monthly payment, in which case its normal that you pay tax on buyout since its never been taxed.

Here in Texas we also pay full up-front sales tax on a lease. Don't doubt it - it's real, and it hurts.

[Skoidat69]

Originally Posted by dreamingat30fps

Yeah it would be great if the govt knew how to manage money and spend it wisely.

Government wouldn't have a problem with managing money and spending it wisely if the politicians didn't create the current budget systems and allocation of funds... my old boss worked in Gov't Finance and the stuff he explained to me made my blood boils and eyes roll back in head cause it was so complex and crazy..

[TheWatchGuy]

whats even more dumb is in my county in Colorado, i had to pay taxes based on the MSRP, not the actual sale price which was lower. Go figure.

[mc-m3]

Here is WA we have the same taxation on each sale of an auto. In western WA we also get a horrible mass transportation tax annually that was voter approved on what I call false advertising. tax is based on MSRP with a minuscule depreciation rate. Just got to pay $871 for the tabs on our 'fun' car. DD is like $60, but it is 15 years old.

[Littlebear]

People always make fun of NY taxes. I pay $28.25 a year to register my 2017 330i.

[mc-m3]

Originally Posted by Littlebear

People always make fun of NY taxes. I pay $28.25 a year to register my 2017 330i.

But your property taxes more than make up for it. We have looked at houses of comparable value to our Seattle area home, your property taxes are more than double ours. I thought ours was high at ~7k/year, equivalent house there was ~16k (ouch!).

[Littlebear]

Originally Posted by mc-m3

But your property taxes more than make up for it. We have looked at houses of comparable value to our Seattle area home, your property taxes are more than double ours. I thought ours was high at ~7k/year, equivalent house there was ~16k (ouch!).

Yes, we make up for it in a few ways. A sore point in NYC is how low property taxes can be on Coops & Condos, but don't tell anyone....
NY state counties have lots of tax power for property.

[jsf721]

Guys

States need to generate sales tax so they can waste more money.

If car taxes bother you don’t look into estate taxes. I already paid the taxes. Why do my kids need to get penalized further by being taxed at crazy high rates? Keeps the tax lawyers and estate planners in business.

[Fly320s]

Originally Posted by shiftdnb

Dude please...

Dude, please. That chart only shows discretionary spending, which is a small part of the total US budget.

Here is the total US budget for FY2020:

https://en.wikipedia.org/wiki/United...nfographic.png

Social Security and Medicare cost as much as all of the discretionary spending you showed.

[paquet]

Originally Posted by Maitre_Absolut

if you are paying full tax on your car regardless of how long you keep it, you are doing it wrong.

I sell privately but arrange the transaction through new car dealer purchase, often called an accommodation sale. Its like a trade in except I get retail value on my car since I sold privately. I pay tax only on the difference between sale price and new.

Essentially I get a tax refund on the "unused" portion of prior car and then pay full tax on new, and then roll that forward again. I end up only paying tax on the portion I used. If everyone does that, the government never collects more than 1x tax on a car.

this is fascinating - i had no idea.
i looked up 'accommodation sale' and found this - common practice for those who know how: https://www.espaceautodesjardins.com...e-of-a-vehicle

Now reading about how to minimize estate taxes. There's something called an 'Estate Administration Tax' in Ontario, which gets expensive fast, etc.