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Reducing Car Taxes Not the Best Option for the Poor

Update: Rep. elected Norton clarified online that his intention is to lower the rate of taxation in cities like Pawtucket, which have a higher car tax, while raising the tax in municipalities like Jamestown to compensate. I wouldn't object to this change, as already noted below. 
The key is holding the state assembly to this promise. As Norton jockeys with other state reps., I wonder whether there will be a push to amend his proposal to lower the car tax in poorer cities without replacing that revenue with a higher tax in wealthier areas. It's something we should keep our eyes on.

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I don't think this will be a giant surprise for anyone reading this blog regularly, but I'm not a proponent of lowering car taxes.

The issue has come to the forefront of campaigning again, this time by State Representative elect David Norton of Pawtucket.

There's some nuance here. Since we stopped having a state car tax under the Carcieri administration, individual municipalities have had to set their own rates, and poorer communities have set higher rates than more affluent ones. I agree with Norton about this discrepancy, which is definitely unfair.
Here's where I disagree with Norton's overall goal of lowering car taxes as a means of putting money into the economy.

The first problem I see is that lots poor, elderly, disabled, and young people do not drive. Owning a car is not exclusively a middle class or upper class thing, but it is disproportionately so. So it's absolutely true that there are poor people out there struggling to pay for a high car tax, but there are also lots of poor people for whom a lower car tax will have no effect whatsoever, and plenty of people who aren't poor who will reap awards those poor people don't get.

Stated another way, if you were going to give back $1,000 in car tax to someone, why not give back $1,000 in some tax that affects everyone? Why not target your tax cut more carefully to the poor, so as not to miss anyone? The car tax does hit some poor people, but lowering it requires that poor people ante-in and buy a car in order to get a benefit, and that to me is unfair.

The second problem I have with lowering the car tax is that the United States is riding a fantasy that driving is affordable as the default way of getting around. It isn't that other countries don't drive, or that people in other countries don't own cars, but the amount of driving (VMT) and the amount of car ownership is much lower. The 6/10 Connector (which incidentally, Norton supports turning into a boulevard, at least judging by his favoriting history on Twitter) is a really emblematic example of really expensive infrastructure that encourages driving, discourages anything that isn't driving, and puts our state in debt. Yet, nationwide as well as here in Rhode Island, we're floating this idea that making driving more affordable is a progressive value, and to my mind that's chasing a ponzi scheme.

Countries with very egalitarian wealth distribution typically have high car fees. Yes, it's true that if you live in Denmark or the Netherlands, where the tax on a car can be much higher than in Rhode Island, that it's going to be hard as a poor person to own a car. But it's also going to be harder to be a poor person, because if you're focusing your social policy on things that directly reduce poverty, instead of routing them inefficiently the way the U.S. does, you're going to have better housing security, food security, educational opportunity, and health outcomes.

Why is lowering car taxes such a popular and recurrent idea? I think the reason is that it's an ordinary nuisance, but one that isn't seen as political. If I tell you that we should have a comprehensive health service to ensure that everyone has access to healthcare, that issue (in America) has been marked as left-of-center. But lowering the car tax appeals to people in a kind of apolitical way. You can find people who want to vote for Donald Trump who like the idea, just as much as you can find liberals. But I think we ultimately have to face the fact that higher car charges save poor people money. The current system tries to uphold universal driving as the ideal, so that people who might benefit best from a robust transit or biking system have to buy all the expensive accouterments of car ownership. Along with militarism, I think car culture is one of the things that has most stood in the way of a more democratic and egalitarian U.S.

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6 comments:

  1. "Along with militarism, I think car culture is one of the things that has most stood in the way of a more democratic and egalitarian U.S."

    I agree.

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  2. I do not agree at all. The car tax locks people in poverty. Those that struggle to pay the tax get behind and cannot pay it. If they cannot pay the tax they lose the car. Once you cannot register the car you lose the ability to get a job. I personally know two people that cannot get a job because they can not put the car on the road. One is a thousand dollars past due.

    Once you fall behind it is difficult to catch up.

    I thank god that I am not in that situation however taxes have consequence. To be frank I find your comments on the subject illogical.

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    1. I don't disagree with your description of the problem, but I do disagree with your solution. Why is giving an equal amount of money to poor Rhode Islanders irrespective of their car ownership illogical? The focus on redistrbution of wealth is not what I disagree with, but the idea of running that redistribution through the car tax.

      What about people who never even had a car? Those folks are passed over for jobs, but this policy ignores them.

      I should note that in a Twitter conversation, Norton clarified that he'd like to see the Pawtucket rate go down, but the Jamestown rate go up. I have no issue with that, which is fair. My issue is with the broader proposals that frequently call for lowering the car tax across the board.

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  3. In Providence at least, the car tax has been jiggered to be a regressive tax on the poor. We're of course looking for a graduated income tax where the richest people pay a greater percentage of their wealth to the state, and not less, but we're apparently not going to get that out of our politicians either.

    If your vehicle is cheap, the government slaps an unjustifiable "if it were in mint condition" valuation on your vehicle. Most 20-year-old cars aren't really in mint condition and their actual sale prices in the Bargain Buyer would never equal their supposed valuations.

    The only good news here is that they aren't taxing non-motorized vehicles under the "if it were in mint condition" valuation rule.

    --Paul Klinkman
    anonymous as usual

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    Replies
    1. This comment has been removed by a blog administrator.

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    2. I think having progressive taxation and redistribution of income is a separate issue from the car tax. The car tax is an appropriately expensive tax because car infrastructure is expensive. The way to resolve the regressive pattern you're referring to is to have broader programs of income redistribution. But doing that through modification of the car tax itself changes the incentives to drive-- not only does it make driving itself cheaper, but it also puts revenue in jeopardy for other programs (because when we're in debt we'll simply steal from the general budget to pay for roads, which was basically the Republican alternative to RhodeWorks). The car tax ideally should be used to rebuild roads and provide alternatives to driving through transit, biking, and walking. Having money on hand that comes from a tax on cars means that other tax revenue can go to greatly increasing the social safety net.

      I like to remind people that a single year of RIPTA costs more money than the tax on a fairly new car. A RIPTA monthly pass (the cheapest way to use RIPTA) is $70, which at 12 months would come out to $840. The car tax on a Providence car is $60 for every thousand dollars of value, with a $2,000 deductible before the tax is accrued. So a $16,000 car is 16-14 x 60 or $840. You have to have a car that's more expensive than that before you're paying more than what a RIPTA rider pays.

      People think the car tax is a "gotchya" because they don't think of the expenses that accrue to make driving a practical means of getting around. If I suggested that we should greatly expand the budget for RIPTA and give everyone free RIPTA fares, that would come off to the average G.A. member as a wildly socialistic vision of government tax-and-spend policy for social engineering. But that's exactly what we do all the time for driving. And that policy doesn't merely make driving easier (which seems like a form of freedom, however expensive) but it also obliterates a lot of options to not drive. If you subsidize everyone not to take the bus, the people left taking the bus will be on low-ridership lines, justifying less frequent service, causing less ridership, justifying further cuts. We have to stand firm in resolving this problem of subsidizing cars. It's not mutually exclusive with a program of social equity through other programs.

      As I said above, though, if the goal is to reduce the car tax in poorer areas by increasing it in wealthier ones, I would support that. I'm just suspicious of the talking point that has people feel that they're being taxed unfairly or "nickeled and dimed" because the car tax.

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