I posted earlier about how Cash-for-Clunkers, by driving up the values of used cars, would hit Rhode Islanders because Rhode Island municipalities tax car ownership based on the Blue Book value at December 31 of the prior year.
We just received our tax bill for this fiscal year, and three of our four cars rose in value for tax purposes, even though the cars are a year older.
The notion of used cars rising in value runs against everything we have come to know about used cars, wear and tear, mileage, and all the other things which common sense would tell us would cause a car to decrease in value each year of use.
The largest percentage gain was in a 2000 Honda Odyssey with over 200,000 miles on it, which is on death watch. The value rose from $2,800 to $3,849, costing us an extra $44.12; the increases in two other vehicles cost us another $139 in taxes.
One of our vehicles did drop in value, but I have not attempted to estimate if it would have dropped even more without Cash-for-Clunkers.
The $183 extra tax cost is a floor, not a ceiling, because it does not take into account that the three vehicles likely would have dropped in value with an extra year of use in normal times.
Virtually every Rhode Islander is going to feel the pinch from Cash-for-Clunkers. Thanks fellas.