Last summer’s Cash for Clunkers program artificially boosted used car prices by requiring destruction of the clunkers, thereby restricting the supply of used cars.
That was bad enough for people looking to buy used cars.
But the market distortion caused by government intervention is hitting Rhode Islanders particularly hard.
Rhode Island taxes the value of automobiles (yeah, welcome to our nightmare). The value of the automobile for tax purposes is based on the fair market value at December 31 of the preceding calendar year.
So Rhode Islanders are being taxed this year based on the inflated value of used cars last year primarily as a result of the Cash for Clunkers program.
But it gets worse. Rhode Island used to exempt the first $6,000 of value, but in a revenue raising measure, is allowing municipalities to lower the exemption to $500.
The result is a nasty tax bite for Rhode Islanders who own used cars, as detailed in The Providence Journal:
If you own a car in Rhode Island, be prepared for a shock when you look at your property tax bill….
“My own vehicle went up,” said Linda L. Cwiek, chairwoman of the state Vehicle Value Commission, which sets uniform values for tax assessors statewide. She drives a 2007 Jeep Grand Cherokee.
Rhode Island sets the value of vehicles registered in the state based on used car prices at the end of December of the preceding year. Taxes are then calculated as a percentage of that value. That means Rhode Islanders’ car taxes are affected by the used-car market.
“There are less used vehicles out there for people to buy,” said Cwiek, who also is the tax assessor in North Kingstown. She placed blame for the short supply of used cars on the federal “Cash-for-Clunkers” program.
To stimulate a sagging automotive economy and to aid the environment, the federal program offered financial incentives to turn in older vehicles in favor of buying more fuel-efficient models. In all, the program removed 677,842 vehicles from the road and sent them to the shredder. That prevented them from entering the used-car market.
They never learn, do they? If you liked Cash for Clunkers, you’ll love Obamacare.
——————————————–
Related Posts:
Cash for Clunkers Driving Up Prices
We Are All Car Buyers Now
Follow me on Twitter, Facebook, and YouTube
CLICK HERE FOR FULL VERSION OF THIS STORY