Eliminate the car tax?

Allow the shock and horror of this post having nothing to do with tomorrow’s runoffs to pass and consider if you will, the proposal by Mark Burkhalter (R-Alpharetta) to get rid of the car tax.

What do you folks think about this proposal? Is it good public policy? Is it a good political issue?

The AJC has an article about it here.

26 comments

  1. RandyMiller says:

    There were good points made by Mark Burkhalter. Specifically, we’re taxed when we purchase the vehicle, pay taxes in fuel, then a tax when we purchase new tires and trade in the old ones. And to read the article they really are thinking this through and considering how other states have dealt with this and the results.

    With the rising cost of fuel, this would help many whose work is dependent
    on transportation. For example carpenters, plumbers, those in construction, who use their vehicles to bring home the bacon and more than pay their fair share of tax dollars. Republicans should always be the first in line to help those that work the hardest.

  2. Mike says:

    Any cut’s a good cut. Demon is correct(and I’m sure he never gets tired of hearing that) in that they’ll probably put some little wussy cap on it. We wouldn’t want the rich to get more than their “fair share”

  3. jsm says:

    Call me wacky, but I believe any tax on property is wrong. A person’s property holdings are not directly tied to their income or their available cash. Taxes tied to property only hinder economic activity, because of the long-term tax burden tied to an asset.

    All taxes should be replaced by either a flat income tax or a sales tax. This way all taxes paid on any property would be paid up front, relieving unnecessary long term burdens associated with purchases. This is the only way to ensure fairness in taxation locally, statewide, or nationally.

  4. Call me whacky, but the state has cut over $1 billion in “austerity” cuts over the last 4 years from the Quality Basic Education formula that they give to local school districts. Even this year with a huge surplus, the state’s QBE formula said Give X to the local districts and the state said we will give them (X – $170 million).

    How can the state afford to reimburse the counties for the lost revenue from car taxes if they can’t afford to pay the school districts the formula amount determined by the Quality Basic Education act.

    Or, is this an implicit admission by the Republicans that roads are more important than education in Georgia? Anyone?

  5. Michael C says:

    Nice try Chris. History proves that tax cuts increase revenues. Are you really blaming Republicans for Georgia’s poor education? Boy they really screwed things up in the short time they have been in power. Sarcasm intended. Or should we look at the poor policies put into place over the last 140 years of Democratic rule?

  6. Mike says:

    There is no correlation between educational spending and improved grades. Pointing that out of course makes me anti child and a bastard of the highest degree.

  7. Michael C, apparently I am a better informed conservative than you. History has not proved that tax cuts lead to increased revenues, but the theory you are talking about applies to marginal rates on income taxation. The theory goes that if I CUT the tax rates on wealthy earners, they will work harder (because they get to keep more of their money) and earn more therefore total receipts will go up.

    Maybe you can explain to me how that has any relavence at all to eliminating the property tax on cars? Clearly, by the theory of lower taxes = more revenue ELIMINATION will not lead to more revenue. Elimination = no revenue. Which gets us back to our original question, how do we pay for this stuff?

    Mike — the local school boards have to spend a certain amount for each child regardless of how much the state pays them. During Sonny’s tenure almost 100 local school districts raised property taxes to make up the shortfall. So there really was no increase in spending, just a shift from state revenue to counties and cities raising local property taxes.

    So, without making any judgement call at all about how much we should be spending, why do we think the state should reimburse the counties for auto tax revenue but not/when they don’t do it for school tax revenue?

  8. Mike says:

    Interesting. I plead ignorance. Just to be straight on the matter, I’m assuming that you’re not one on those, “throw money at it till you fix it types”. Oh yeah..I’ll stilly lobby for a tax cut whenever the opportunity presents itself. Cut first….ask questions later.

  9. techtrack says:

    this is a good idea. i think that we really need to look at the overall tax structure and change the entire system.

  10. Mike, fair questions. Conservatives on this site have said they are in favor of eliminating the property tax on education and replacing it with some sort of sales tax. They say (and I don’t agree with them but for purposes of this conversation lets pretend they are correct) that not everyone (renters) pays property taxes so it is an unfair burden on homeowners.

    What I want to know is this – if we stop charging a property tax on automobiles, how will the shortfall be made up, because inevitably it will be made up somewhere. On the AJC some people have talked about taxing mileage or miles per gallon, weight (based on the damage the car does to the road) etc. And while these are novel ideas, I don’t expect our Republican legislature to touch anything that looks like a tax increase.

    That said, as has been proven by the school tax increases, the Republicans in the legislature don’t seem to have a problem with taxes going up as long as they aren’t stuck with the vote authorizing it. Now, I am a homeowner in DeKalb County, and I fear the easiest/quickest way to make up for the loss of motor vehicle funds will be to just increase the county millage rate for homeowners. Right now, everyone who drives a car pays the tax, and I drive an older car so my tax is only about $100/year. Not something I look forward to, but in all honesty not that bad considering how much I use the roads.

    Now, my property tax rate would skyrocket compared to $100 dollars because $100 is kind of on the low end of this tax (below average) and there are more car owners than homeowners so the smaller set of homeowners would be stuck with the total bill for everyone.

    So you can see why, given the recent history and as a homeowner, I’m a little worried about the ability of the state to pull it off. I’m also a little confused by the seeming inconsistency of the GOP on these type issues.

    The ad valorem tax is pretty similar to the proposed “fair” consumption tax. You drive a nicer car, you pay a higher tax, similar to buying a more expensive car and paying more in sales tax. The only difference is that the tax is broken up into multiple years instead of just happening all at once. With the fair tax, we’re told that the fat cats who choose to buy more/nicer things will pay more — and that is fair, but with the ad valorem tax, all of a sudden that reasoning is not fair anymore?

    As you can see, the more you actually think about and examine tax issues, the harder it is to take pandering Republican politicians seriously on the issue. Somebody show me where I’m wrong here!!! Why is a fair tax based on value of consumption “fair” but an ad valorem tax based on value of consumption in need of elimination?

  11. CobbGOPer says:

    Well, I know one way we can start taking control of education spending: get rid of the Federal Department of Education, and make education policy and responsibility a state matter. The problem is we have unfunded mandates from Congress, where you have to admit, Georgia’s influence has waned in recent years with the loss of Coverdell, Gingrich & Co.

  12. flamingmoderate says:

    Chrisishardcore,

    You are partly right in your analysis. We do have to have some taxes. I mean, that’s how the government pays for stuff, right?

    How about this:

    Why not keep the sales tax as is? Why not keep the capital gains tax as is? Eliminate EVERY other tax. The poor/middle income folks would still contribute as much to the coffers as they do now through increased purchases and mild investments. And the rich would contribute more through heavier investment and slightly increased purchasing. Would you be in favor of that?

  13. CobbGOPer says:

    And Chrisishardcore, one question:

    Why in God’s name do you live in DeKalb County? Not attacking you, just curious, since their taxes are some of the highest in the state.

    I mean, when I first moved up to DC, I was young and didn’t do my due diligence, and made the mistake of moving to suburban Maryland. Once I got my tax returns and realized how much less I would pay if I were in Virginia, I moved within two months.

    Now, obviously, I live in Cobb, and you couldn’t pay me enough to move to Fulton or DeKalb.

  14. CobbGOPer says:

    Oh, and here’s my solution for making up the money lost from the car tax: we don’t. How about our ‘conservative’ Republican officials down at the Gold Dome prove their credentials, grow a pair, and cut some spending for f— sake?

    If Senator Johnson is still reading, perhaps he can riddle me this: what programs can we cut spending on or eliminate to equal the amount of money lost from eliminating the car tax ($500 million)?

  15. Bill Simon says:

    Eliminating the car tax will be fought by Republican county commissioners up and down Georgia. Why? Because that tax goes directly to county government coffers.

    And, if they eliminate the car tag tax, then all of us folks who own fixed property/assets in the county will be taxed at a higher millage rate to make-up for the difference.

    I think Burkhalter is trying to find an issue to save himself after looking like a fool with the free gas pipeline for Atlanta Gas Light bill.

  16. LymanHall says:

    Now the GOP is taking a page out of the Talmadge playbook? What was the saying? Something about a $5 tag on a $30 dollar rag? Does anyone remember this?

  17. Mike says:

    RIght on Cobb! It doesn’t have to be about cut taxes here and raising them there. Cut! Cut! Cut!

    By the way, I fully believe that renters pay property taxes. I, for one, am mearly a pass through entity when it comes paying taxes on my rental properties. If other landlords aren’t, they may want to reconsider investing in real estate.

  18. Michael C says:

    Chris, all tax cuts generate more revenue for government. Taxpayers use and spend that money, generating more sales tax revenue, whether it is a reduction in the millage, an increased child tax credit or simply a rebate check, it is simply more money in the taxpayers pocket.

    Mike beat me to it but renters due pay property taxes. It is factored into the rent. Insurance too. The same principal applies to businesses, who pay no taxes but merely collect it from consumers for the government.

    I believe the lost revenue will be made up in the increase of sales tax revenue, but for the sake of argument, lets say there is a shortfall in revenue. Good. I want government to make do with less. I call for a top to bottom audit of all government programs and services. Consolidate, eliminate, or do away with the waste, the redundant. and unnecessary.

    That would be the best government expense I can imagine.

  19. CHelf says:

    If you want a tax system that makes more people pay their fair share then getting rid of this tax will not do the trick. Counties who are the recipients of this will have to make up for the loss one way or another and that means reassessments and tweaking millage rates. This means higher property taxes which means only those owning property pay. So all of those renters, the apartment crowds, driving those tax free cars are now exempt while a heavier burden is placed on the land owning class. Seeing higher property taxes is an incentive for further urban sprawl with more people moving to the cheaper areas or just renting. There goes the housing market. There goes long commutes. There goes the gas supply. There goes polution. Etc. Etc. It looks good for legislators to appear to ‘cut taxes’ but all it does is make the local officials out to be the ones who face a rabid crowd and dashed re-election hopes. There will be a bipartisan mutiny on this one.

  20. Well I’m glad we finally agree that renters pay property taxes too, just not directly. The sales taxers who want to replace the property tax have been using the lie that renters aren’t affected by the property tax as a crutch to prop up their idea with the “fair” crowd.

    Steve Davis is fond of talking about how cost efficient roads are, and if we take him for his word one of the ways roads pay for themselves is with ad valorem taxes. What would be a more equitable way to pay for the roads that we use? I’ve said before that I think either converting to toll roads (where you literally pay as you go for what you use) or switching to some sort of MPG tax/higher fuel tax would be the fairest way to go. That way the more you use the roads and the less intelligently you use the roads (6,000 pound 12 MPG SUV to take the kids to school or drive to your desk job) the more you pay.

    However, I think we can all agree that the Republican legisature will not replace the ad valorem tax with a corresponding tax increase, so it will be up to the counties and as Bill has pointed out the only increase the counties can do by law is to raise property taxes on homes and apartments, which is no good for anyone.

    Now, as far as “raising” revenue by cutting taxes, I will say that even if you subscribe to this theory (and I think you’d have to jump to so many conclusions about what people are doing with their money to even get close) we can all agree that even if the same (or more) tax revenue is raised by eliminating this tax, not all of it will go to the counties — which currently get the tax and set their budgets accordingly. A lot of it will go to federal income taxes with the profits made from selling goods to consumers who all of a sudden have more income.

    Hey — that’s MAYBE (big if) why supply side reductions to marginal income tax rates raise more revenue — because the federal government gets that money as income taxes anyway and if there is more income there is maybe more income taxes. But as I’ve pointed out before, it has absolutely nothing to do with this specific problem, which is how do we eliminate one source of revenue for the counties, which the revenue payers don’t like, and replace it with something else that is more equitable and also gives the counties the needed revenue. Maybe if you could cut the ad valorem tax and guarantee that the money would get back to the counties it would make sense, but I see no logical way to do that.

    And as for the person that asked me about living in DeKalb County, well we pay a slight premium to not have evolution warning stickers on our textbooks, and we love it! We also get county trash twice a week plus one day of recycling pickup, how much do you pay your private trash collector?

  21. Mad Dog says:

    Still sort of mired in the “cut taxes for Paris Hilton makes every economic indicator rise” mess.

    Were you referring to the Laffer Curve? Cutting government taxation means more consumption therefore more government revenue? In relation to what?

    The Laffer Curve is a statement of relativity. What is the relationship of increased revenue to tax cuts? To measure that requires knowing revenue without cuts and with cuts.

    Then, lost revenue must be measured and used as an offset.

    Plus, few of these numbers are “normed” for annual comparisons.

    Then, few people acknowledge increased government expenditures result in GDP growth, therefore, increased government revenue.

    So for any “history” to demostrate a tax cut resulted in increased tax revenue, that history must have details on government expenditures.

    So, Reagan did cut Paris Hilton’s taxes. She did spend some more money on Rodeo Drive. Therefore, “What’s good for Rodeo Drive is good for the country?”

    Nope. Not a truth. Not even close to logical.

    Reagan cuts taxes. Reagan increases spending. Reagan increases national debt roughly 300%. Reagan is no financial giant. Closer to being descriptive of historical events.

    Dr. Laffer’s theories assume EXCESSIVE TAXATION has a negative effect in market fundamentalism. Market fundamentalism being just one theory within economics.

    Dr. Laffer has never been able to put numbers to his theories.

    He still maintains a website.

    Laffer was in the Reagan Adm. His statements at the time were not that tax revenue would just increase after the tax cuts. He stated the cuts would pay for themselves. No debt accumulation if spending remained the same.

    Since spending changed, history provides no example to how well his theories worked in reality.

    Economics has moved past market fundamentalism.

    🙂

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