Governor Snyder vetoed bi-partisan bills SB 94 and SB 95 that would have slightly moved up the schedule to phase in a partial credit of the value of trade-in vehicles against the taxable value of a new vehicle.
Under the current law if you buy that shiny new vehicle at a discount off the “Manufacturer’s Suggested Retail Price” (MSRP) you pay sales tax on the MSRP. Looking at vehicles this week (GM made in Mexico or China, e.g., with 20-40% “North American” parts), a $46,000 vehicle might be discounted to $38,000 but you pay tax on $46,000. 6% of the $8,000 differential is $480.00 too much tax!
When the vehicle is 10 years old and worth $6,000, you still pay license fees on the basis of the new MSRP. It is a dispicable shameless scam! And it discriminates against poorer and some minority folks who prefer the older luxury or classic vehicle over a newer, smaller one.
And it doesn’t just apply to vehicles. That Menards 11% discount, Kohl’s $10 certificate or Jo-Ann’s 50% off coupon, you still pay yaxes at the artificially high pre-discount price. Check out your cash register receipts, then get steamed about the rip-off!
SB 94 and 95 does advantage new auto dealers over used vehicle dealers or individuals selling their own vehicles, as the small discount only applies to new vehicle sales.
Beginning in 2013 the dollar amount of the discount available for a trade-in was $2,000 (@6% = $120.00 less sales tax). It increases available discount by $500 ($30.00 tax) per year until it reaches $14,000 (i.e., $ 840 in 2039).
The bills would have kept the $500/year allowance increase until 2018 and then taken it up to $1,000 allowance increase ($60.00 less taxes on a new vehicle trade-in/year) until the $14,000 differential was reached ($2019). The actual impact might reduce combined sales and use tax by merely $2.7 Million in FY 2018-19, $5.6 M in 2019-20 and $8.1M in 2020-2021. Fiscal Analysis
After Billions of dollars in increased taxes and fees, Billions of dollars in spending increases and a huge surplus last year, Gov. Snyder could not bear the thought of reducing taxes to spur car sales and jobs even a tiny amount – even though the SMALL rollback would not apply until his last months in office.
This after Snyder fought even a very small roll-back in income tax of merely $ 2.00 on $1,000 income – again breaking promises made to taxpayers years ago. He could not stand the thought of the average family paying $100 a year less income taxes, to spend on things important to them, creating more private sector jobs paying more government taxes.
In our opinion Snyder wants a socialist Michigan economy. He wants to grow government and assure future growth. It is time the legislature sends him a message. Even such a mild one as to over-ride his vetoes of SB94 and SB95.
Related: Legislative leaders mulling first veto override of Gov. Rick Snyder MLive Link
Thank you! Do it! Let them know what you think!