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May 23, 2006

Auto Registration: Soak the Rich

by Brad Warbiany

When I was younger, I lived in Illinois. When it comes time to re-register your vehicle, it’s a flat fee, regardless of what sort of vehicle you drive (within certain classes, i.e. all passenger vehicles are identical). When I went to Purdue, I was shocked to find out that Indiana wasn’t so simple. The more expensive your vehicle, the more you pay in registration fees. You drive a beat-up old pickup? Your registration is cheap. You drive a brand-new Porsche, though, and be ready to bend over…

Something about this has always irked me. Now, a flat fee I can understand. Or, a graduated fee, based on some sensible reasoning, might even be understandable. But I don’t see how making people pay more just because their car is worth more makes any sense whatsoever.

Now that I’m in Georgia, we have what are called “ad valorem” taxes. To register my POS truck, not so expensive. The wife’s new Volvo, not so cheap. What sense does that make, other than to punish rich people for buying expensive cars? As if that’s not already taken care of by the sales taxes on such purchases?

I’ve got a better idea. For the same reason that I’m not opposed to gasoline taxes being a primary funding mechanism for road maintenance and construction, why don’t we index registration fees to vehicle weight? Just as gasoline taxes are a way of funding roads through users fees, heavier vehicles are more punishing to roads than light ones, and thus it makes perfect sense to charge heavier vehicles more than light ones.

Of course, leftists and environmentalists have no reason to oppose such a measure, since most large SUV’s are quite expensive to buy (hence you’re still punishing rich people), and tend to be more environmentally damaging through road damage and pollution than small cars. And for a guy like me, who views the optimal vehicle as a motorcycle weighing under 500 lbs, it’s especially cheap.

What are the possible objections to such a system? First, that somehow more expensive cars get more benefit from the system (i.e. police, etc) than cheaper cars. I think this is patently false, and any additional benefit is paid for by an owner’s insurance premiums, rather than society. Second, you could claim that owners of large vehicles are being double-penalized, as they’re currently paying more gas taxes per mile due to lower fuel efficiency. Of course, if they’re being charged sales tax on the purchase of the vehicle, and then inflated registration fees due to the value of the vehicle, they’re double-paying anyway. If anything, it’s an argument for a flat registration fee to cover adminstrative costs of maintaining the records, and full funding of maintenance through gas taxes.

Either way, there is no justification for making more valuable cars more expensive to register than pure class envy. I know there aren’t many people in this country who actually object to soaking the rich, but we should at least point it out for what it is.


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8 Comments

  1. Brad,

    It could be worse. Come to Virginia. The annual registration fees through DMV are relatively cheap, but each year every car owner is required to pay, at the county level, a personal property tax based on the value of their vehicle.

    About 8 years ago, Jim Gilmore won election as Governor on the promise of abolishing the car tax. He came close, but not close enough, and, slowly but surely, the politcos in Richmond from both sides of the aisle have turned the so-called car tax “relief” that was passed back then into little more than a joke.

    Comment by Doug — May 23, 2006 @ 7:47 pm
  2. Florida does (did?) tax by weight.

    Comment by ashley — May 25, 2006 @ 12:24 am
  3. Or better yet, why not totally do away with fuel, property, registration and all other taxes and fees.

    Then true freedom would occur.

    Comment by LOTE-Smith — May 25, 2006 @ 10:28 am
  4. Smith,

    I accidentally misplaced my magical Rothbardian “end-the-state-immediately” button. Until I find it, I’m just going to have to stick with good old persuasion… Unless you happen to have a spare button I could use?

    Comment by Brad Warbiany — May 25, 2006 @ 11:01 am
  5. Brad, an expensive Porshe is light compared to lots of cheap vehicles. A Lexus/BMW/Mercedes car is also lighter than a much cheaper low end minivan. There isn’t a pure relationship between weight and costs. The double counting objection doesn’t work. Your system seems fair if the goal is to nexus road maintenence to vehicles. Of course, amount of use is more important than any of these factors, making gas tax (except for hybrids or alternative fuel vehicles) the most accurate tax. Maybe we should make this really simple and just tax based on a simple calculas based formula relying on weight, mileage, and state v. interstate use.

    Comment by KJ — May 26, 2006 @ 8:59 am
  6. KJ,
    I’m not saying there’s a 1-to-1 relationship between cost and weight. Frankly, my ideal would be a purely gas-tax based system, where the registration fee was maybe $25 to cover the cost of registering and record-keeping, and that’s it. (FYI, I drive a truck that’s not very gas-efficient or valuable, so a gas tax proposal is actually not beneficial to me personally).

    But I think if we’re trying to be intellectually honest, we should charge people based on the damage they cause instead of the value of their vehicle. It at least has *SOME* rational basis, where taxing more for expensive vehicles is just soaking the rich.

    Comment by Brad Warbiany — May 26, 2006 @ 9:19 am
  7. Its the same broken logic that leads to sin taxes. You pick a group that people dont like and dump all your taxes on them.

    Here in Texas they just lowered property taxes but raised taxes on cigarettes a dollar a pack to finance the schools. Of course not many people care much who dont smoke because smokers have been so demonized the last decade.

    Why should anyone pay for schools other than the people who have children attending them? All taxation and fees should be based on access/usages . Making others pay your way because they are rich or belong to an unpopular group is wrong.

    Comment by James — May 26, 2006 @ 10:52 pm
  8. the beauty of the gas tax is that it incorporates weight and mileage into it. no calculus necessary.

    more weight, worse gas mileage (for themost part). More distance, more gas used. ergo, both eight and distance are accounted for by gas taxes.

    Comment by Nick — May 30, 2006 @ 3:14 am

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