Scott MacKay Commentary
7:13 am
Mon September 26, 2011

The "clunker tax" and state house pols

PROVIDENCE, RI –

Protestors waving anti-car tax signs gathered outside Providence City Hall recently to criticize the tax increases proposed by Mayor Angel Taveras and the city council. And more than 200 people showed up at last week's Warwick City Council meeting to fire away at Mayor Scott Avedisian's plan to increase car taxes to pay for city services.

What is especially galling to those who pay car taxes is the "clunker tax" on vehicles worth less than $6,000. Until last year, owners of cars or trucks worth less than $6,000 were exempt under state law from paying any taxes on those vehicles.

So what happened? Well your state legislators and former Gov. Donald Carcieri enacted state budgets that slashed about $200 million in state aid to cities and towns over two years. At the same time, Republican Carcieri and the Democrats who run the General Assembly cut income taxes for the wealthiest Rhode Islanders.

They did this to address a complaint long heard in the business community: That Rhode Island's state income tax, for top earners who make $250,000 a year or more, was too high and substantially higher than the tax rates for the wealthy in nearby Massachusetts.

Republicans, the business community and Carcieri argued that the higher taxes in Rhode Island were driving the wealthy out of our state and keeping business from moving in.

Many of these complaints were surely exaggerated. There is scant evidence that the moving vans were lining up in Barrington or East Greenwich to take the families of surgeons and the business elite to Massachusetts or elsewhere. A study by the Chafee Center at Bryant University based on U.S. Census results shows that Rhode Island ranks 14th in the country in the percentage of millionaires living in the state.

What the State House politicians gave to the Yacht crowd, it took from the Quahoggers.

This is where the clunker tax comes in. To make up for the cuts in state aid to communities, it allowed city and town governments to raise car taxes in a very regressive manner that hits hardest at the poor and elderly people living on fixed incomes.

Carcieri and Democratic lawmakers lowered the car tax exemption from $6,000 to $500, meaning that thousands of car owners who paid nothing are now subject to this nettlesome and regressive tax.

Of course the State House crowd made mayors and town council members the fall guys on this one. Because these local officials decide the municipal budget and tax rates, the mayors and council members take the hits from angry car taxpayers.

Voters ought to be smart enough to see through this scam. The next time your car taxes go up, you ought to head up to the State House with the placards. The State House crowd was allowed to run for reelection last year saying they didn't raise state taxes. Instead they in effect increased the car tax. Will the people who vote and pay the bills remember this next November?

Do you have insight or expertise on this topic? Please email us, we'd like to hear from you. news@wrni.org.

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