Bacon's Rebellion

Democracy Thrives in Sunlight

Time to Scrap the Rube Goldberg Tax

—

by

James A. Bacon
in

Another complication has surfaced in the Personal Property Tax Relief Act of 1998: dealing with people who lease their cars. The aim of the tax is to provide relief for individuals, not leasing companies. But sorting out ownership can get very complicated.

Writes Jessica Kitchin with the Charlottesville Daily Progress:

Initially when Virginia passed the Personal Property Tax Relief Act of 1998, those who leased vehicles were ineligible to receive the tax break from the state. The state eventually opened the door for leasers to get tax relief, but that move opened up a world of complication for localities.

“It gets down to being able to really know who that owner is, and who is using that vehicle,” said Robert Walters, chief of administration taxation at Albemarle County. “You need some kind of identifier. We need to make sure we’re dealing with the right people.”

That means county officials need to verify who owns what. Then the county reimburses the leasing company, which reimburses the owner. The situation can get incredibly confusing, and Albemarle County is calling for state legislation to simplilfy the process.

Relief for the car tax was a worthy idea — state spending was out of control during the go-go yeras of the 1990s, and taxpayers deserved to get some of their money back. But it’s increasingly apparent that the idea of getting the state entangled in a local tax is not working. Furthermore, the General Assembly isn’t even living up to the original deal: It capped state payments to localities, and the tax on the first $20,000 in value will never be fully phased out as promised. Taxpayers are getting short-changed, and the state is causing headaches for localities administering the tax.

The General Assembly should scrap the entire Rube Goldberg arrangement — let localities set their own rules for the personal property tax — and apply the proceeds towards a reduction in the state sales or income tax.

Share this article

ADVERTISEMENT

(comments below)

ADVERTISEMENT

(comments below)

Comments

3 responses to “Time to Scrap the Rube Goldberg Tax”

  1. Anonymous Avatar
    Anonymous

    It was a scam from day one — using state revenue to in effect pay a local tax, a local tax that was still being assessed with all the attending bureaucracy. If the plan was to then reduce state spending, that was a total failure, wasn’t it?

    How about we let localities have the full car tax back, but then give them road maintenance responsibilities? So at least your annual car tax bill will go to filling potholes, painting signs and repaving.

    Or give them the option of having the car tax back with the revenue going into a regional authority, which can leverage the money, combine it with other sources, and develop a regional transportation program.

    It is clear that the General Assembly is incapable of reaching an agreement on a statewide revenue source. It is equally clear that the public will accept new revenue if they know it will be spent locally. The Commonwealth is dead — its every county for themselves, now.

  2. Toomanytaxes Avatar
    Toomanytaxes

    Jim – You make some valid points. The money might be better used for other types of tax relief. However, what are the odds that the incumbent Governor and Senate would ever consider tax relief? Slim to none! The status quo is better than more spending.

    7:58 – Those of us who live in NoVA have long ago concluded that the Commonwealth existed solely for purpose of sending dollars to Richmond for cents in return. One of the major benefits from Gilmore’s car tax relief plan was that it sent back considerable tax dollars to NoVA that could not then be used to subsidize RoVA, including some counties that are far from being poor. The car tax dollars returned to NoVA effectively went to pay our other taxes. It was one of the few good things ever to happen to NoVA from action by the General Assembly.

  3. Ray Hyde Avatar
    Ray Hyde

    Look, this is very simple. We paid tax on the income, we paid tax on the purchase. The only thing that can possibly pay taxes is cash flow. Anything else amounts to confiscation of what we already own and have paid tax to acquire, twice.

    Trash the car tax, trash the real estate tax. If you can’t get what you need from the money that is sloshing around, then you need to recognize that the money is not available.

    Any other course amounts to shooting yourself in your investment foot, and that is where the next round of cash flow comes from.

    TMT is right: there are too many taxes. But that isn’t necessarily the same as too much tax.

Leave a Reply

Read More