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This is part of a multi-part reflection I've been doing following the death of my friend, Mark Baumer . There's nothing graphic i...

Sixty Dollars.

The proposed cut to the car tax is extremely popular. But I'll bet you $60.00 I can change your mind about it.

Why Sixty?


$60.00 is the amount of the proposed cut, per vehicle. This has been sold as being about protecting the most vulnerable, but the tax cut is actually a flat one. Every person who owns a car gets $60.00 back (except if they own two cars-- then they get $120.00). The only people who don't get a tax cut are those who don't own a car. Super progressive, right?


If the goal of the tax cut is to help the most vulnerable, Mayor Elorza and Providence City Council aren't choosing a very efficient way to do that. They will give many people a tax cut who are poor (including us-- yes, we bought a car, and both our tax receipts for 2015 were under $20,000). But a lot of middle class people (and flat-out rich people) will get the same tax cut (or a greater one, if they own multiple vehicles).

But of course, while many people who drive do struggle to pay the car tax, those who don't drive are overwhelmingly poor. 25% of Providen├že households are car-free. For a neighborhood like Olneyville, that jumps to nearly 50%.

How Does the Math Work?

Providence car tax is currently set to $60.00 per $1,000.00 of value, but there is a $1,000.00 exemption. If your car is worth $1,000.00, you pay nothing. $2,000.00, you pay $60.00.  $20,000.00? $1,140 ($20,000.00 - $1,000.00 x $60.00).

Under the new plan,the exemption would go to $2,000.00. That does mean that only those at the very bottom of car value (below $2,000.00) would go to zero. But just as with the other exemption, that figure carries up the economic scale. The $20,000.00 vehicle owner would now pay $1080.00-- the same $60.00 tax cut as the jallopy owner gets). If the person owns two vehicles, whether they're Flintstonemobiles with rusted out floors, or $40,000.00 BMWs, they get twice what the person with one car gets: $120.00.

To Heck with Your Math, James. I Want a Tax Cut.

I'm not saying you should be against a tax cut. I'm saying you should want a different structure to the tax cut.

Let's give everyone a tax cut: $60.00 per adult taxpayer. No double-ups, as with the previous tax cut, but unlike the Elorza proposal, every household would benefit. If our goal is to get the poorest people a tax cut, then we have to include the households without cars.

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3 comments:

  1. I realized in reviewing my work that I probably should have proposed a per household taxcut rather than per person. My mistake.

    I had trouble on the DMV website finding data on registrations per town, but I'm sure that's easily available somewhere. We could just take the budgeted tax cut amount and change the denominator to the number of households instead of the number of vehicles. That might even get us a number larger than $60.00. Some two-car households would lose a bit, but one-car households would probably gain, or at least stay the same. No car households would gain the most.

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  2. Except there is no per person or per household tax to cut. The only three city-controlled taxes to my knowledge are property taxes, car taxes and tangible property taxes. Between these three, increasing the car tax exemption seems to be the maximally progressive tax cut the city has authority to implement. (Setting aside for the moment the question of whether reducing the non-owner-occupied tax rate would result in lower rent.)

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    Replies
    1. I think you hit the nail on the head: the owner-occupant/non-owner-occupant tax difference would be a better target.

      Look-- it's probably unlikely that we'd lower rents, but our target should at least be to prevent raising them (at least when that hike is due to taxes, and not inherent values going up). The tenant tax is racist and classist because it punishes market-rate affordable housing options.

      We also need to get rid of exclusionary zoning. People don't think of that as a tax, but it effectively is. That means allowing more multifamily housing in Ward 1 and getting rid of the arbitrary limit on student occupancy in R-1 zones. It means ending parking minimums.

      I'm not a legal expert, but a transportation writer. I don't how taxation authority works in detail, but the city should be creative in finding ways to close this gap. The city has to bond for basic paving costs. How can we claim that it's in the position to lower the car tax? But if it does, why not include a RIPTA or bike benefit as an option for non-drivers?

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