A perceived tax burden is often less about the amount owed than it is about matching one’s prior expectations. In the recent Sound Transit Motor Vehicle Excise Tax (MVET) controversy, relatively little has been made about the quantitative burden – people generally aren’t parsing dollars – but much has been made about rate fairness. Sound Transit’s use of a traditional depreciation schedule based on the Manufacturer’s Suggested Retail Price (MSRP) sufficiently differs from one’s everyday experience of their vehicle’s value that it feels like a punitive taking. But if ST3 had proposed raising the same amount of funds via a steeper depreciation schedule and a higher authorized rate, I am confident that the number of changed votes would have been negligible. People generally vote on the perceived merits of the projects in question, period.
Motor Vehicle Excise Taxes (MVET) have two strikes against them. First, their annual lump sum payments feel more viscerally punitive than property or sales taxes. Biannual property taxes are often embedded in rent or mortgage payments, and sales tax is a drip drip of a few dollars here and there. Second, using vehicles as a tax source intuitively feeds the War on Cars narrative, but it is little different than using gas taxes to pay for HOV/bus lanes. An excess of motor vehicles is a major reason for transit capital projects in the first place, and most of us who ride transit also own those cars. It is eminently fair to use one to help us transition to the other, and moving away from cars and toward transit is a spatial imperative if we are to continue to grow as a city.
My own car’s MVET cost $150 this year, and it admittedly was an unpleasant experience to pay it. But rationally I know that the total amount is fair, I voted yes with the majority, and that that’s the way democracy works. I also know that if I spend more than $8,500 this year on taxable goods, I will have contributed more in sales taxes this year than I did in MVET.
Sound Transit’s MVET is also surprisingly progressive. If through ‘defeasance’ we reverted to a 2006-era depreciation schedule, owners of cars less than 11 years old would see a tax cut and owners of cars greater than 11 years old would see a tax increase. So any populist uprising is a lot of smoke and mirrors. The dynamics nicely emulate the current healthcare debates in the other Washington. It may play well for legislators to stoke the fire, but reversion would be an effective tax cut for the rich, done in the name of the little guy.
Discussions floating around about a low-income MVET rebate are valid and promising, and Seattle provides the precedent with its $20 car tab rebate. The hit to ST’s revenue would not be severe, and those hardest hit by ST3’s taxes would get a welcome reprieve. But those of us who can pay should pay. Expensive vehicles are luxury goods that reflect our income status, and in a regressive state that already disproportionately taxes the poor, MVET is one of the most progressive sources available. It is progressive and fair for the Lexuses of Laurelhurst to pay more than the Toyotas of Tacoma.
UPDATE: Sen. Rebecca Saldaña (D – Seattle) introduced SB 5906 Tuesday night, which would allow a low-income rebate from Sound Transit’s portion of the MVET and property tax. It is the companion to HB 2148, by Rep. Kristine Reeves (D – Federal Way) that was introduced a couple weeks ago. Senators have the rest of today to sign onto SB 5906.
Sound Transit’s MVET is also surprisingly progressive. If through ‘defeasance’ we reverted to a 2006-era depreciation schedule, owners of cars less than 11 years old would see a tax cut and owners of cars greater than 11 years old would see a tax increase. So any populist uprising is a lot of smoke and mirrors. The dynamics nicely emulate the current healthcare debates in the other Washington. It may play well for legislators to stoke the fire, but reversion would be an effective tax cut for the rich, done in the name of the little guy.
This can’t be emphasized enough. This is a substantial giveaway to the wasteful practice of buying a new car every 3-5 years, punishing people who, out of necessity or prudence, take care of their cars in order to get their full value of them. It puts important projects at risk, in order to transfer wealth from the poor to the relatively well-off, in a tax environment as brutal to the poor and kind to the upper-middle class as just about any state in the union.
I understand perfectly well why Paul Ryan and Donald Trump is eager to imperil valuable public services to transfer wealth upward. Why Washington Democrats would be eager to do so is beyond my comprehension. It’s monstrous and unconscionable.
I don’t mean to quibble with this otherwise great article, but is the car tab tax really progressive? That would imply that someone would pay a higher rate (not just amount) on a luxury car, versus a cheap car. Rebates could produce a bit of progressiveness, but only for those who qualify. A middle class person with a $10,000 car would pay (I assume) the same rate as someone with a $100,000 car. The person with the $100,000 car would not pay more than 10 times as much (unlike an income tax).
It seems to me that this is just of the many ways in which the middle (and often working) class is screwed over by our ridiculous tax system. High sales tax, very high B and O tax (that hammers small businesses), very high professional fees, all so that we can avoid something progressive, like an income tax. This tax might be as bad as most of the taxes — and the proposed solution might even make it worse — but it is still a bad tax.
Oh, and is there still a per car tax? In other words, if I own four cars, each worth ten grand, do I pay more than the guy who owns a $40,000 car?
Consumption taxes are generally seen as regressive if the rate is flat, I agree, but cars are elective purchases, I see them as a proxy for income, and the wealthy are more likely to buy newer cars more often, pinning them to the top or near-top of whatever depreciation schedule we choose. So I guess I’d say its neutral or regressive in structure, and often progressive in practice. But point taken.
There’s also the wrinkle that the most poor are likely to not own a car, especially in urban areas. I’m not sure if that holds as much as poverty suburbanizes, but it helps make the MVET more progressive.
But that doesn’t take away from Ross’s point that, as a proportion of income, this tax is felt most by the middle class.
A lot depends on where you live and what you do. If you live in the suburbs, or commute odd hours (nursing, convenience store, security guard, etc.) then you could have a very tough time getting to work without a car. Sure, it is an elective, but not if you want to keep your job, have a decent night sleep, or spend time with your kids. We aren’t talking about a luxury item, like a couch or a bed (neither of which are taxed in this way). You can always sleep on floor (just make a pallet with blankets) but in many areas — for many jobs — a car is pretty much a necessity. Hell, for many it is their home (and a place with plumbing or a kitchen is just an elective purchase).
That would imply that someone would pay a higher rate (not just amount) on a luxury car, versus a cheap car. Rebates could produce a bit of progressiveness, but only for those who qualify.
That’s not the only way we might describe a tax as progressive. Because rich people consume more late-model cars, and poorer people either buy older used cars or get more use out of their cars, the tax will hit rich people harder relative to a KBB valuation model.
But progressivity is a scalar, not sortal thing. It doesn’t have a higher rate for rich people, strictly speaking, it just hits car consumption patterns correlated with greater wealth harder car consumption patterns correlated with less wealth. An ideal progressive tax would target rich people more directly, but it’s certainly a progressive tax compared to the alternative currently being batted around, and that’s what matters.
I would like to see a study back up that assertion. Generally speaking, people buy one or two cars per person. There is a top limit (roughly 50 grand) that very few people exceed. This means that only a handful of very wealthy people have anything close to the amount of automobile wealth that their overall wealth would imply. In other words, their are plenty of people who have most of their wealth tied into their cars, and almost all of them are poor. Very few wealthy people — only the car collectors — are like that. Sure, a guy might drive a Mercedes or a Lexus, but even if he spent 100 grand on that car, that is still a small fraction of his wealth (or income). Most of those guys pay cash (of course) while a guy driving a used — but very reliable — five year old Corolla may be making payments on the thing. When he is done paying it off, the car will be the bulk of his wealth. He is paying a way higher percentage of his income on that car (and that tax) than the guy with the Lexus.
As a proxy for wealth it is a blunt instrument, and my guess is a very bad one.
I think we’re talking past each other. I’m not commenting on the overall progressivity of the MVET, I’m commenting on relatively progressivity of the two valuation schemes. Shifting to a KBB valuation would decrease the overall progressivity of taxation WA, regardless of wherever the MVET sits on the regressive–progressive scale.
Progressive relative to what, I guess? I’m not sure that car consumption is progressive relative to income. Poor people spend more of their lower incomes on just about everything, even cars. A graduated income tax, or perhaps an estate tax, are probably the only options if that is the standard.
But relative to other taxes we have in WA, MVET surely comes out way ahead. So the current MVET is progressive relative to the Rossi MVET. Likely also progressive relative to other alternatives that ST could have considered had the Legislature objected to the MVET increase in a timely manner in 2015. And far ahead of a sales tax or property tax.
>> And far ahead of a sales tax or property tax.
Again, I would like to see that study. Two scenarios: One gal makes forty grand a year as a nurse. She buys a car to get to work (she tried transit, but it doesn’t run at night). She bought a late model used car (for reliability and value). It is nothing fancy — it actually has a dent on the side – but it gets her there. She spent ten grand on it, and it runs like a top. She just bought a condo in the suburbs for 120 grand. So basically, about 25% of her yearly income is in the car, and about three times her income is in her place.
Another guy just landed a job at Amazon. He has been in the tech business for several years, and now makes about $150,000 a year. He bought a house in Silicon Valley and now is paying off a mortgage up here. He has about 300 grand of equity in the house, and is making payments on the other half of the place (a nice little house on Phinney Ridge he bought for 600 grand). He likes to hike, so he bought an SUV for about 25 grand. So basically he is paying twice his salary into his house, and the car is only taking one sixth of his yearly income.
The Amazon guy is clearly wealthier, and makes a lot more money. In terms of home wealth, both pay the same proportion of the their wealth into taxes. The same is true of the car. In both cases, though, she is paying a higher percentage of her *income* in order to do so. In other words, she is stretching to buy that condo, because she doesn’t want to spend the rest of her life having one of the basic necessities (shelter) be based on the whims of the market. The same is true of her car. She would love to buy something cheaper, but really doesn’t feel comfortable with a really old car at night (reliability is essential).
In both cases, she is buying what she considers to be a necessity, A car and a home. Nothing fancy — in either case — just what she needs to buy to get by. In his case, he is living large. A car for the mountains — definitely not a necessity (truth is, you can drive the Corolla on logging roads too) but man, is it nice to get all the gear in there. He also doesn’t need to live in Phinney Ridge — or even a house — but hey, he worked hard, is good at math, and what is more important anyway — saving lives or getting the ones and zeros in the right order?
I think you get my point. The MVET is just one of the many, many, stupid, unfair taxes that the state (and local jurisdictions) impose because it doesn’t have the balls (or the people don’t have the intelligence) to adopt an income or capitol gains tax.
Good examples. both this and the one above and the bakers yesterday.
Just one point, “She just bought a condo in the suburbs for 120 grand.” You’d probably have to go to Spokane to find a condo for $120K. Maybe Olympia or Bellingham. Far beyond the “suburbs”.
@RossB, I think there’s a clue in the calculation of ST3 typical tax rates. Recall the original description of the tax impacts relied on average property values and average MVET scheduled basis. When Sound Transit updated their estimates of typical taxes, they shifted to using the median.
It hardly change the property tax estimates at all. But it cut the MVET nearly in half for the typical car. So car values are much more skewed than house values. It’s highly likely that this makes the MVET much more progressive.
https://seattletransitblog.wpcomstaging.com/2016/07/11/17-less-sound-transit-revises-st3s-household-cost-estimates/
Of course there is a “per car tax”; you pay it on each registered vehicle.
So far as your hypothetical question, clearly it would depend what the prices quoted mean. Since you can’t buy any car for $10,000 now, even little Chinese ones, how much you’ll pay on the four $10K’s depends entirely on how old they are. You need to provide more data in order to evaluate the comparison.
He’s assuming the valuation of the 4 cars is equal to the valuation of the one car.
I know there are still used cars being bought for less than 10K. Some of my best friends are used-car owners.
I don’t think it is necessarily the case that poorer households keep their cars longer. It’s probably more the case that lower-income families are buying the cars that are already old enough to benefit from ST’s current MVET formula, and would see their MVET go up under the Rossi/O’Ban soak-the-poor bills.
Meanwhile Sen. Rebecca Saldaña introduced Senate Bill 5906 last night, which is the companion bill to House Bill 2148, allowing a low-income rebate for low-income MVET payers and property taxpayers. Senators have today to sign on as sponsors. Contact your senator today and ask her/him to sign on to SB 5906.
There is a flat per-car fee assessed by DoL, somewhere on the order of $30 per car IIRC. You also pay per-car for extras like periodic replacement plates, vanity plates, discovery pass, etc.
The ST3 MVET does not include a per-car tax. You will pay more on the bottom line for four $10K cars as you would for one $40K car, but none of that difference goes to Sound Transit. It goes to DoL or to other programs you opted into.
AJ,
Of course. Ten thousand times four equals forty thousand in base-10 math whose use the State mandates in depreciation schedules. But if you have one $40,000 car which is relatively new — a likelihood but not a certainty — it would probably be earlier in the depreciation schedule than at least some of the four $10,000 ones. But not necessarily so. The $40K might be a twelve year old Mercedes that originally sold for $75,000 (the really do “hold their value”) whereas the four $10K’s are last year’s Chevvy Aveo’s. In that case you’d definitely pay more for the Chevvies.
That’s why I said “you can’t know the answer without details about the cars” in so many words.
Yes, it’s an extreme comparison, but it’s basically true.
@Richard Bullington: What you’re saying is true, however adding in the factor of market vs. statutory valuation obscures the question without answering it.
The question is whether there is a per-car component of the tax separate from the tax based on valuation. This question and the clarifying example are only meaningful if you used the state depreciation table to arrive at the valuation of one $40k car vs. four $10K cars. If you did that, there should be no difference in the total MVET for these two cases.
The total bill will be higher in the four car case because the DoL does assess flat per-car fees. However, those fees have precisely nothing to do with ST3, motor vehicle excise tax, or statutory vs. market based valuation.
Brent, I should have said “any new car”. My apologies; that’s what I meant.
Tim, you’re right. Everyone pays the $30 state registration fee. So four cars would be higher than one IF they were all of exactly the same age and the four totaled exactly the same price at purchase.
Thanks, Tim!, for answering my question.
So four cars would be higher than one IF they were all of exactly the same age and the four totaled exactly the same price at purchase.
Which was exactly the scenario I mentioned. I think you are making this too complicated Richard. The official valuation of four cars equals the official valuation of one car.
Ross, you too are right given a strict — and I’d have to say somewhat stilted — interpretation of your question. But who, except a fleet operator for whom tabs are just another cost of doing business, is going to buy four $10,000 cars of identical age? Anyone with more than one vehicle is going to have a mix of ages and models. That’s just the way people do things.
That’s why I interpreted your question as referring to what everyone thinks of as “value”: the KBB price.
I do think that we’ve all come to an agreement, though, that Sound Transit would benefit exactly equally in the strict hypothetical you proposed and that the other $90 goes to the Washington DOL for other purposes.
Oh, and that “very high B and O tax that hammers small businesses” is offset with a gross “tax credit” (or rebate) of $871 per year. For retailers — a common classification for “small businesses” — the rate is 0.471%, or $47.10 per $10,000 of sales. So a retailer has to have sales of $185,000 dollars before paying a penny in B&O taxes.
To be very blunt, if you’re not making $870 pre-tax profit on $185,000 in sales, you really don’t have a viable business. The whine about “the time before I made a profit” is a straw man. The IRS disallows deductions for any personal “business” that doesn’t make a profit for three years running. That’s a much bigger problem than the puny B&O tax rate.
I think that you are using the wrong value for the small business credit. The $871 credit applies if you are a service provider; the one for retailers is about half that for retailers.
William, thank you for the correction. But I stand by the basic argument: if you don’t earn $435 on $92,500 in sales you don’t have a viable business either.
@Richard — You obviously have not dealt with real small business people. I have family that struggled — made way less than minimum wage — building their business. Maybe that isn’t “viable” to you, but it is the way that many, many small businesses start.
But that misses the point. Say a bakery grosses 250 grand a year. After paying for materials, rent, and the one part time employee, she makes a whopping 35 grand. How much do the feds take out (for income tax)? Not a dime. How much does the state take out the B and O tax? It depends on how much flour she went through. If you don’t think that is unfair, I’m not sure what to tell you.
Folks here think we don’t have an income tax in this state, but we do. It simply applies only to small businesses.
Of course there is Federal Income Tax due on the $35,000 profit, whether it’s a C Corp, an S Corp or a sole proprietorship. There would be different tax rates in each scenario, but there would be a tax.
I really don’t understand what you’re driving at by bringing this up.
” It is progressive and fair for the Lexuses of Laurelhurst to pay more than the Toyotas of Tacoma.”
Solid alliteration.
The Subarus of Seattle, the BMWs of Bellevue, the Kias of Kirkland, the Volvos of Vancouver, the Rolls Royces of Renton…
There are Rolls Royces in Renton? Who knew?
And Kia’s in Kirkland?!?!?!?!?! Quick, call Save Our Trail!
Perhaps Ravenna or Redmond would have been better choice than Renton?
Would the MVET increase or decrease on a University Place Yugo?
The Yugo would already have been junked. So no license tabs at all.
“Sound Transit’s MVET is also surprisingly progressive. If through ‘defeasance’ we reverted to a 2006-era depreciation schedule, owners of cars less than 11 years old would see a tax cut and owners of cars greater than 11 years old would see a tax increase. So any populist uprising is a lot of smoke and mirrors.”
Does anyone have an example of where a car more than 11 years old would see a difference of more than the cost of a latte or two a year?
$25000 (MSRP) car, new .8% tax only
before year 11, the new depreciation schedule (together with the 15% cut in the base value) leads to a lower tax under the new valuation, 15% lower in year 1. The difference is greatest in year 7 when the amount paid under the new depreciation schedule is slightly below 72% of tax paid under the old depreciation schedule.
year 11 old: $44 new: $44.20
year 12 old: $20 new: $40.80
year 13 old: $20 new: $39.10
year 14 old: $20 new: $35.70
year 15 old: $20 new: $27.20
year 16+ old: $20 new: $17.00
Over the first 16 years of a vehicle’s life ST raises about 75% money — down from just over 6% of MSRP to just under 4.6% of MSRP. Note that because the cut is front loaded, the actual effect is worse, since (1) some cars don’t stay on the road for 16 years and (2) the extra dollars collected in years 11 through 15 are worth less than those not collected in years 1 through 10.
Ergo, not two lattes in year 12, but four, declining to two in year 14 and a half. [Assumptions are that latte is a Venti macchiato (who messes with anything smaller or less yummy and also bothers to go to an SBux?) and barista receives a $1 tip]
a 4 latte increase on a 4 latte tax bill seems pretty extreme, particularly others are getting 9 latte tax cuts on a 23 latte tax bill. (year 7 tax goes from $114 to $70)
When I said 72% earlier I misspoke, the real value is 61% (72% is was the amount attributable to the new depreciation schedule, the rest comes from the in initial 15% basis cut)
Indeed it does, but think about the health benefits. This could be seen as a Tobin tax on the Very Seattle habit of Too Much Coffee!
Isn’t it simpler to just ask, “How much income tax did you pay the state this year?”
If you want services (whether it is transit or decent schools), you pay for them somehow, someway.
First, their annual lump sum payments feel more viscerally punitive than property or sales taxes.
This is really the heart of the matter.
I have a 2016 car with a wildly unrealistic MSRP (more than $10k above my actual purchase price) that could be the poster child for these tab complaints. The cost of this year’s tab is $480. In one shot, that’s definitely painful. At $40 a month, it would just feel like one more monthly car expense
The unreality of the valuation is at least partially made up for in the new schedule by the change to using 85% of MSRP rather than the full MSRP as the base value. In your case, I realize, not all — by my math you managed to get a new car for about 25% off MSRP.
Your main point that paying in installments is valid. It’s how most people pay for their cars, how many pay for their insurance, and how essentially everyone pays for gasoline (all of which are bigger fractions of the total cost of running a car than even the new, higher MVET). I wonder if the best fix wouldn’t be to require the DOL to allow car tabs to be paid in monthly EFT installments in advance?
I recognize that my situation is unique (my transaction was based on a sales price at about 70% of MSRP). I’m not particularly irritated by the use of MSRP; it’s easier to compile (meaning lower administrative cost) than pretty much any other source of value. But the annual shock is kind of nasty. I think there should be a variety of payment options: either an annual, manual payment like we do now, or more frequent auto-debited payments.
Spreading out payments into auto-debits is an invitation to closing the debited accounts and running up administrative costs to try to collect.
Getting the money in hand is so much cheaper.
Which is why I suggested EFT installment payments in advance. It also allows the current enforcement hint of changing tag colors once a year — if you have the tag you paid the tax.
David, I think you’ve hit on the key to defusing this whole business. Painless and easy. Would probably also alleviate a lot of working people’s hate for taxes in general.
Extra benefit of persuading people to join a credit union- a much better deal than other financial institutions, like car dealerships and payday lenders.
Now, and not being sarcastic, just curious and also prepared: What’s there to make the rightest-wing legislator vote against it?
Mark
Which is another strong argument for a gas tax. Yes, it is regressive. But it is something that really should be discouraged (how is anyone hurt if my car sits in my garage all the time). But more than that, once it is invoked, it doesn’t seem like the end of the world, unlike so many other taxes.
An easy psychological fix would be to collect MVET in quarterly installments, rather than once a year.
Right?
A bill to do the exact opposite — charge MVET biennially — is moving forward.
Do you have a bill number… depending on the details that could be a stealth tax cut.
That could increase the administrative costs. Also, what happens if people don’t pay the 2nd installment? Although the computer system would label them as delinquent, it would be unreasonable to track down their car and rip the tabs off, so they would appear to be complying.
We collect property tax twice a year but those are much larger dollar, making the % hit of collecting another time much smaller.
biennially not semi-annually.
Roger that – misread it.
SSB 5508 made it out of the Senate, got a vote in the House Transportation Committee yesterday, but apparently the motion to advance the bill failed.
“My own car’s MVET cost $150 this year, and it admittedly was an unpleasant experience to pay it.”
I’ve got a suggestion. Since $150/52 = $2.85 a week, why not just have the State give taxpayers a break. Take the tax down to $2.00 if you sign up for weekly online deductions. Which will immediately solve the real problem here by correcting the focus of this discussion.
Last line of your first paragraph really should have saved you the work of writing the rest of it: “People generally vote on the perceived merits of the projects in question, period.” So out of gratitude for the extra work, I’m going to get things chopped to the chase with an initiative to repeal ST-3.
If electorate has changed its mind about ST-3, let’s do the campaign over. As distraction enabling freeing up five minutes for an interagency conference call to get ORCA cards on the Monorail, and the Monorail into Seattle Streetcar. Because have really had it with STP… “Seattle Transit Process”:
The reflex habit of intense angry focus on smallest chip of gravel in a hundred miles of grade separation.
Mark Dublin
Here’s my small quibble with MVET: unlike a gas tax or tolls, it has no correlation to when & how much you actually use your car.
The MVET portion of my tabs are ~$80. I drive ~4000 miles per year. I use transit to commute and walk a lot. When I do drive it is nights/weekends and many of my drives are fairly short.
My sister’s MVET is ~$25. She drives a lot more than I do, drives to work during peak commute hours, and only occasionally uses transit.
I’m somewhat tempted to sell my car since I don’t really need it. That is a decision that would get a little more tempting with a higher MVET. But, if I sell I guess I am (very slightly) hurting ST’s budget.
There are other ways to help ST, like buying a monthly pass even if you’ll be on vacation for a week or two that month.
True, although I already kick in $1188/year for my recurring monthly pass. The vast majority of that money gets allocated to Metro based on my usage, if I understand the apportionment rules correctly. I use Link here and there, but not in my regular commute.
The tough part is that as car ownership costs (including MVET, but also parking, gas, insurance, etc.) increase, more people will decide to go without a car because alternatives are a better value. That makes ST’s funding situation gradually worse. Besides MVET, cars generate a lot of sales tax revenue from their purchase and upkeep.
Put a twenty in the farebox of your choice.
MVET is a property tax on your car. Your house property tax doesn’t correlate with how much you use your house, and neither does MVET.
I’d gladly pay that for high quality transit that I could use, rather than the $19 Sellwood Bridge fee down here that funds a project only a small number of people, most of them not from the fee area.
As I’ve said before, my biggest issue is that you can’t say this is a tax on the value of the car and then make up a number – because the “value” of the car you’re taxed on is basically made up. Better to use an actual value, but increase the rate (or progressively increase it). But, that being said…
Amusingly, some of the people most impacted by this are those who have bought electric vehicles (the ones we’re trying to promote). EVs lose $7.5k in value the second they leave the lot, because that’s the value of the federal tax incentive. And, for a number of reasons you can read about on the web, many EVs lose a ton of value in the first few years. The private party KBB value of a 2014 (3 year old) top of the line Nissan Leaf is $10.5k (and that’s probably about right given the ads I’ve seen). But the MSRP was around $36k. So now your car has lost 70% of its value in three years, while the depreciation schedule assumes it has lost only 25% of its value (including the 85% of MSRP start). Hence you’d be paying ~$183 extra this year on imaginary “value”. Doesn’t affect me (since I don’t own an EV) but I’ve thought about buying one and this is becoming another reason to avoid them.
Agreed. If you’re going to advertise a tax on a percentage of a car’s “value,” the number used in the computation should be reasonably close to what the car is actually worth. That’s what the word “value” is most commonly understood to mean, and is what I assumed would happen when I voted for the measure.
I don’t think it’s fair to shut down criticism by saying that the depreciation schedules were available to the public beforehand and so none of this should be a surprise. Approximately zero voters read past the one-page description of the measure, which simply describes the tax as a percentage of value.
I’m not saying this as someone who owns a Tesla and stands to save a bunch of money by having the depreciation schedules corrected. My family’s own car is right around that 11-year mark where fixing the valuation might actually cause me to owe a bit more money. I’ll happily pay it in the name of honest government.
@Alex: But there are real societal costs to just owning a car: if nothing else you have to store it somewhere.
Unless you manage better than 34mpg (hard to do for mostly short trips unless you have a hybrid or ZEV; perhaps a diesel, but then you’d need 36mpg) even with your low usage, you are probably paying more than $80 in gas taxes. While this doesn’t really address your point, it might provide some sort of consolation.
No one said that the tax would be assessed on the fair market value of the car. The enabling legislation for the ballot clearly explained how the tax would be assessed, and there were ample resources to determine what the first year impact would be. Are you suggesting that voters were misled? uninformed? What are you suggesting that the recourse ought to be? It’s not as if this mismatch had never been seen before: arguably, it was what got us to $30 tabs in the first place.
A fixed depreciation schedule against MSRP clearly gives the State advantages: it greatly simplifies assessing the tax liability, avoids (almost entirely) costly consideration of valuation appeals, and provides a reasonably predictable revenue stream. Arguably, it is also gives car owners the advantage of having an entirely predictable tax burden.
Try this, the next time you have a discussion with someone who complains about the MVET, ask which way they voted.
I’ve been finding they voted No.
So what they are really saying is Yes voters aren’t as smart as them
Yes, I think this is also some of what is going on, the “I didn’t vote for it, so why should I have to pay?” mentality.
The analogy I have been pondering is in regards to school bond levy measures (particularly since one of the most vocal posters on my Facebook feed about this issue works in public schools). Since I don’t have kids and don’t work in public schools, my argument could go that I would not vote for school bond levies because there is no “direct benefit to me”. But if the bond measure passed, I would cry foul because my taxes went up and I did not personally vote for it.
Fortunately, I truly feel that it is important to have an educated population (especially these days) and so generally favor school funding. Similarly, I feel that transit benefits all, including those that remain in cars, so favor it as well and see the value.
The question you should ask them nest is, “If you despise your misguided, delusional, ‘librul’ neighbors so much, why are you here?” For folks other than aerospace or software engineers, the reasonable answer would be some version of “I love it here!” or “My family’s here.” “My job” won’t cut it because anyone else could find perfectly satisfying employment in her or his chosen profession somewhere else.
To the first the clear response is ,”Well then, why do you want to destroy what you claim to love by paving it?” To the second there is no reply other than to share your condolences that some ancestor chose to live in The Soviet of Washington.
I voted for ST3 and I have problems with how the MVET. I also don’t own a car so it doesn’t affect me directly.
My problem is that the way it is calculated now is dishonest. I would argue voters were misled. It should have been made very clear how the value would be assessed. It is the governments role to inform the voters, not sell them on something.
We also should be taxed on usage, not on ownership of a car, as other have mentioned, but that’s another story.
It only seems unfair to people who are new to the region.
The depreciation/MSRP schedule was known, even when I-695 was being discussed.
The idea for $30 car tabs meant that no one had to feel their money was being used someplace else, and that it would be up to local/regional jurisdictions to tax themselves for their own perceived benefit.
How much hand holding do you expect the government to do?
And we can’t even blame our favorite whipping horse the Seattle Times, because this was all laid out by Mike Lindblom prior to the ST3 vote, very clearly.
Sorry, but I don’t buy the “It’s Unfair” argument.
If Tim Eyman wants to start another initiative drive, I say Bring It On.
Truth in Advertising – Name it “I HATE Sound Transit and the People who voted YES so Let’s repeal it” initiative.
People sure like to make assumptions here. I’ve lived here my whole life and think it is a dishonest tax.
We shouldn’t have to rely on The Seattle Times to report this stuff to us. The government should present the relevant facts when they present the legislation, even if they don’t support transit. The government is by, for, and of the people. It is us. It should not be trying to pull one over on us. It is like you lying to yourself when trying to make an important decision, it doesn’t make any sense.
Interesting that Rebecca is sponsoring this. At her Town Hall last Saturday I brought up the car tab issue and how regressive it would be to change the depreciation table to be market rate. I suggested a low income rebate, which didn’t look too likely to her at that time. But any change like this should come with a higher tax rate in order to keep ST3 fully funded.
What the state needs to do is to set up automatic monthly deductions (bank account or credit card) for anyone who wants this. This would be much more palatable. I’ll suggest that to Rebecca. They should do this with property taxes too.
I’m not losing sleep over the “extra” $$ I paid for the tabs on my 6 year old CR-V. But please, let’s stop conflating the issue of progressivity with every transit issue. The real problem is loss of revenue – if somehow the proposed alternative would actually INCREASE progressivity, that would not change STB’s position on the basic issue, would it?
If we care about progressivity, the real answer is an income tax to replace some or all of the sales tax. Not just a cap gains tax but an actual out-of-the-paycheck income tax with progressive rates.
Attaching progressivity arguments to everything in sight – parking-lot taxes, MVET, etc. – just makes it all a lot of noise and diminishes the chance of getting to an income tax or any other real solution.
The transit opponents are making judgements about whether certain taxes are “fair”, without spelling out what “fair” is, when, really, they just don’t like what it is funding. But most of them voted for the bill to allow ST to use these funding sources. We have every right to call b.s. on their It’s-not-fair narrative.
I’m a transit supporter and I think this tax is unfair. By unfair I mean that the vast majority of the public, I assume, thinks their car is taxed based on its actual value. Why wouldn’t they? These taxes are advertised as being based on the value of the car…who would assume that means a manufactured, dishonest value?
On another note, we should be paying for this with an increased gas tax, not with a car tab tax. Gas use (carbon emissions) should be discouraged. There is nothing inherently wrong with buying an expensive car.
I would then ask the question:
Did you use Sound Transit’s online tax calculator and still vote Yes?
Did you read the calculator’s notation – “Note: RTA tax is not the same as value of the vehicle.”
Did you follow through with the DOL link?
Are you accusing both parties of not providing the information and ability to make that informed decision?
I believe I did use the calculator. I just took a look at those links and don’t see where it is clearly spelled out that the value of the car would not be based on some approximation of a reasonably accurate depreciation schedule. People should not have to dig for this information. It is the government’s duty to present it to us.
I am accusing them of not presenting all the relevant information. Burying information somewhere where they know most people won’t look (who has time to watch everything the government does on CSPAN? The actors in government know most of us don’t, and so try to pull fast ones like this) is a dishonest act.
The government is our employee, we are the CEO. If you found out that your employees weren’t presenting you with all the relevant facts to make a decision, intentionally presenting only the facts that back their preference, you would fire them. Perhaps that other information is available at the company somewhere if you went through all the files, but you don’t have time for that. You are paying someone to do that for you. That is their job.
I have no problem with the amount of the tax (which is the only thing the calculator would help me determine). I have a problem with how it is calculated. Heck, I don’t even have a car. I just don’t like the dishonest tactics of our government.