Gov. Walz proposes to tax 160% of your car’s value

I’m not kidding.

Buried deep in the fine print of Walz’ proposed transportation budget is a massive increase in the annual car registration tax (“registration tab”), being sold as a tax “cut.”

You are supposed to notice that the minimum tax on an auto’s registration has dropped (p. 22) from $35 to $30 per year (imposed on cars over 10 years old).

What you aren’t meant to notice is the massive increase in the tax on newer cars.

In additional to the minimum, Minnesota imposes a registration tax based on the car’s value. It’s calculated against the Manufacturer’s Suggested Retail Price (MSRP) of the car when new. (Minnesota Statute 168.013.)

Currently, the initial tax is 1.285 percent of the MSRP, plus 10 dollars. To illustrate, if you buy and register a brand-new $30,000 car, the registration tax would be $395.50. (There are lots of other taxes and fees, including hefty sales taxes).

Year 2, the registration tax is 90 percent of that. Year 3, 80 percent, and so on.

Under Walz’ proposal, the tax increases to 1.285 percent of 160 percent of the MSRP, or $626.80. You don’t have to be a math genius to calculate that the tax went up 60 percent. Year 2, the tax is on 100 percent of MSRP. Year three, on 90 percent, and so on. It’s as if you paid $48,000 for the car.

Rather than taking a more honest route and increase the tax rate, Walz toys around with the depreciation schedule, and imposes a tax on thousands of dollars of car you didn’t pay for and that the vehicle was never worth.

The hidden increase in the license tab fee is just one of many new taxes proposed by Walz, in a time of record budget surpluses.

It’s not even clear that the proposal will raise that much revenue, as fewer and fewer people bother to pay the tax.