MN Democrats pushing ahead with taxing 160 percent of your car’s value
HF 1992/SF 1946 was introduced yesterday, which includes Gov. Walz’ proposed transportation budget for the next two years.
As is traditional with budget bills, the measure is being carried by the Chairs of the House and Senate transportation finance committees: Rep. Frank Hornstein (DFL-Minneapolis) and Sen. Scott Dibble (DFL-Minneapolis), respectively. Both Hornstein and Dibble represent the same wealthy Minneapolis district centered on the Lake of the Isles neighborhood.
The provision that would raise the license tab fee in the first year of your car’s life by basing the tax on 160 percent of the Manufacturer’s Suggested Retail Price (MSRP) can be found on page 31, line 22 of the bill, as introduced.
Democrats are playing games with the depreciation schedule in order to make the dubious claim that this measure is actually a tax cut, as the tax rate (of 1.285 percent per year) remains unchanged (p. 30, ln. 25), while the minimum tax is being reduced by 5 dollars per year (p. 31, ln. 29). These changes would take effect for calendar year 2024.
Make no mistake, the tab fee increase is a 60 percent tax hike in year one, and more hikes in years two through ten. The tax increase will add hundreds of dollars to the cost of middle-class car ownership, at a time of record state budget surpluses. The cost of owning a $40,000 car would go up by nearly $800. This amount is in addition to the thousands of dollars in taxes and fees you pay just to drive the car off the lot.
Charging a fee based on a property value that you never saw would be considered fraud in any other context. At the legislature, it’s just considered clever lawyering.