AJC On Eliminating “Stupid Birthday Tax”

The AJC has a story online today highlighting the elmination of annual ad valorem taxes paid on car tags beginning after March of 2013.

Pending Deal’s approval, people buying cars after March 1, 2013, will no longer face paying an annual tax. Instead, vehicle buyers will pay a one-time fee up front, beginning at 6.5 percent in 2013 and topping out at 7 percent in 2015. The fee takes the place of both the sales tax, which is paid at the time of purchase, and the annual ad valorem tax.

The new program will phase in over about 10 years as residents holding on to their cars will continue to pay the old ad valorem tax as long as they keep their current vehicle.

That’s part of the story.  The nice part.  What is the tricky part is that ad valorem taxes are local taxes.  The new sales “fee” is paid to the state.  Guess what the state is promising?  To return part of those fees to local governments:

For instance, the car tax makes up less than 5 percent of DeKalb County’s $559 million budget, but that county has seen wild dips in property taxes as a result of the recession, while money from car tags keeps coming.

The General Assembly appears to have protected those local budgets.

Clint Mueller, lobbyist for the Association of County Commissioners of Georgia, said the deal struck in the tax bill will deliver “roughly the same amount of revenue” to local governments.

Even so, the change is difficult for local officials conditioned by years of difficult budgets, he said.

“They are extremely risk-averse, and there is some risk in this, so that’s what I’m hearing from our members,” he said.

“Some [counties] could come out better and some could come out worse.”

And county goverments have been set up once again.  Any local government official that believes a state will “guarantee” fee income will return to their budget first needs an electric shock, then needs to read this as remedial reading.

Always remember: The state has been screwing local governments out of guaranteed fee income for at least twenty years, and the leaders in charge keep getting re-elected.



  1. NorthGAGOP says:

    Can we start a Peach Pundit Over/Under pool on how long it takes the legislature to dictate how those funds will be spent. Amazing how many folks talk about local control, but then take it away.

  2. you says:

    If it replaces the sales tax and the ad valorem how can it even come close to bringing in the same amount?

    • Calypso says:

      Yeah, my question too. In Gwinnett the sales tax is 6%, with 4% going to the state, 1% to the county and 1% to schools. If the new tax is a one time 6.5-7% how can that be neutral with no annual ad valorem?

      Is the 1+1% the county and schools now get going to be on top of the 6.5-7% of the new tax?

  3. Max Power says:

    BTW: How are people in the metro area supposed to handle emissions testing under this new scheme?

    • Calypso says:

      How would that be affected? You still have to get a license tag every year and must have an emmission inspection to get the tag/registration renewed.

      • Max Power says:

        So every year you have to line up get a new tag but not pay the tax? I assume there would still be a small fee to cover the cost of the tag, but doesn’t that seem wasteful. If you don’t have to pay the annual ad valorem why even bother with annual tags?

          • The Last Democrat in Georgia says:

            “Buy a diesel and you don’t even have to worry about the emissions inspection.”

            “Or move to Hall county”

            I just might act on both of those suggestions.

            • seekingtounderstand says:

              Hall County is a corrupt almost bankrupt good ol boy run county facing financial failure. Before you move here, you may want to investigate.

              • The Last Democrat in Georgia says:

                “Hall County is a corrupt almost bankrupt good ol boy run county facing financial failure. Before you move here, you may want to investigate.”

                Sounds just like the monster mega-suburban county next door, Gwinnett (by developers for developers), and the government of the larger state that it is located in, Georgia (run by an arm of the infamous Hall County Mafia with Nathan Deal as Governor and Casey Cagle as Lt. Governor).

                You know, the more I think about it, the more of a perfect fit it seems.

                Count me in!

  4. ryanhawk says:

    And when Charlie says “screwing local government” he means screwing local property owners who will make up the inevitable shortfall.

  5. You have to remember that private sales will also be “taxed” now (title fee) instead of just dealer sales. That expands significantly the amount of revenue collected.

  6. Dave Bearse says:

    Did them what passed the new 7% car title tax consider it’s going to lighten the pocketbooks of Georgians that itemize for income tax purposes by increasing income taxes?

    I’d guess the typical Georgian itemizing for income tax purposes will be payin’ either an additional 21% or 31% of what was their car ad valorem tax in federal (15% or 25%) and state (6%) income taxes. The value of the deduction of say $500+ in ad valorem taxes for a couple of household cars isn’t exactly chump change. But hey, what’s an additional $100 or more a year in federal income taxes per household when reforming state taxes? I know, I know, it’s all Obama’s fault.

  7. elfiii says:

    “The new program will phase in over about 10 years as residents holding on to their cars will continue to pay the old ad valorem tax as long as they keep their current vehicle.”

    Well isn’t that speshul!

    • Dave Bearse says:

      Not surprisingly that front loads tax revenue as people continue to pay ad valorem (though lesser and lesser over time). The tax legislation revenue projections period covered only three years. Look for the screw to local governments to increase over time, but then again that to be expected. It’s after all a GaGOP party plank.

        • The Last Democrat in Georgia says:

          For their own personal (selfish) political gain, local governments be damned?

          “Hey everybody, I helped to lower and eliminate your STATE taxes, vote for me”.

          • ted in bed says:

            Actually, they raised taxes and reduced revenues to local governments. Only Republicans could accomplish that.

            If you review the Georgia State report, it has huge holes. They make lots of wild estimates pulled out of their arses. Only consider 3 years of impact. And because of the 3 year window, it under estimates the HUGE tax increase that the change in retirement exclusion causes. In 2016, 65+yo retirees get an UNLIMITED exclusion of all retirement income.

            Anyone know if the Governor is going to sign it or is he open to real financial analysis?

            • The Last Democrat in Georgia says:

              “Actually, they raised taxes and reduced revenues to local governments.”

              Well, we know that, but all that most voters are going to hear is that the Birthday Tax is gone (or will be gone when someone gets rid of their current car, per fine print).

            • The Last Democrat in Georgia says:

              “Anyone know if the Governor is going to sign it or is he open to real financial analysis?”

              The last I heard Governor Deal wasn’t too happy with the way that the bill hamstrungs any possible future attempts to abolish the state income tax, but was very, very happy that the energy tax on manufacturers was abolished and is more than likely to sign the bill as a result as that was his main focus.

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