I voted NO on HB 4234. This is a great example of a bill that preferences a certain group of people with special tax breaks. Anybody who knows me can tell you that I am a tax breaks for all or tax breaks for none kind of guy. And so while this bill is being proclaimed by many as some sort of great tax cutting bill, I beg to differ. Let me give you some background first. This bill initially passed the House in June with a vote of 100-7. The bill was designed to provide a sales tax break on the purchase of vehicles, boats and RVs. Essentially, the sales tax on the price of the newly purchased item would be reduced by the value of the trade-in. Changes to the bill in the Senate cap the adjustment to $2,000 or the value of the trade-in, whichever is less. The bill passed the Senate with a vote of 38-0 on October 22. I voted no because this bill picks and chooses winners and losers. For example, if a person sells a vehicle to someone other than a dealership and then uses the proceeds of that sale to purchase a vehicle at a dealership, then that person is paying tax on the full value of the newly purchased vehicle and the buyer of this used vehicle is also paying tax on its value. If this legislation is passed and signed into law, then only the difference between the two values will be subject to tax, but only if the vehicle is used as a trade-in and not if it is otherwise sold and its proceeds used to help purchase the new vehicle. The issue should not be whether or not trade-ins reduce the tax due on a dealership purchase, but rather should used vehicles be taxed at all. Indeed, this bill will have the effect of driving up the cost of used vehicles. It creates incentives to sell used vehicles to dealers rather than private parties. Indeed, it has picked and chosen one group of people as the winner and everyone else is a loser in this policy change. Finally, there is a large burden that this bill places on the transportation and school aid funds. In order to adjust, the State needs to reduce spending accordingly. This is not a likely outcome. The more likely outcome is that the rest of the state (those not purchasing a vehicle at a dealership with a trade-in allowance sales tax reduction) will pay higher taxes or not receive the benefit of a tax reduction that would otherwise occur (had this legislation not been adopted). This bill passed the House with a vote of 101-7.
Posted on: Mon, 28 Oct 2013 05:12:35 +0000
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