Facts on car tax show Malloy’s plan would hurt

Greenwich-Voices-DadakisBeware Democrat governors bearing gifts as re-election begins.

When he was mayor of Stamford, Dan Malloy ripped into then Governor Rell for proposing car tax elimination. Now, readying his re-election campaign, Malloy proposes requiring local governments eliminate their car tax on autos assessed under $20,000, or 90%+ of cars.

Connecticut requires cars, like houses, be taxed by municipalities at 70% of value using the same mill rate (or tax rate) used for houses. The mill rate, set by local finance boards (like the BET in Greenwich), raises revenue to fund town spending.

A car assessed at $20,000 generates Greenwich taxes of $208. That same car in Waterbury pays $840 because of their higher mill rate. While the tax amount varies by municipality, the revenue generated is used exclusively for local government spending.

On the surface it sounds like a great idea. Initially citizens probably favor it. But it’s far more complicated than that.

With his proposal, Malloy has done what Obama only dreams about — bring Republicans and Democrats together in a bipartisan fashion. But he did it in opposition to his plan.

It’s understandable why Democrats are opposed. Never has there been a group who so loves to impose taxes than the modern Democratic party. Even in Greenwich, BET Democrats demand again and again greater spending, higher taxes and more debt.

But why are Republicans opposed? Shouldn’t they favor eliminating taxes? The truth is since no municipality proposes reducing spending to offset the lost revenue, the tax isn’t really being eliminated. Instead it’s being redistributed. Local governments will have to increase the mill rate on homeowners to make up lost revenue.

Greenwich will lose about $6.1 million of revenue. The overall mill rate would need to increase about 2% or spending needs to be cut $6.1 million. Imagine the outcry if that happened.

Many Connecticut municipal leaders don’t want the lost revenue raised locally and instead want the state to make it up. Regrettably, under Malloy’s leadership, Connecticut teeters on the brink of bankruptcy. Where’d the money come from?  I’m glad you asked.

Already some Democrats advocate continuing the tax, but with mill rate uniformity, insisting it’s unfair when car taxes vary by municipality. Fairness is their second favorite word after taxes. Although it’s always fair that most people pay no income taxes.

Expect Democrats to propose a statewide car mill rate of 20%-25%, meaning car taxes for Greenwich citizens would approximately double. If you think it’s not so bad because the additional revenue would be spent here, you’d be wrong.

I believe Democrats, and they’ve tried it before, will propose revenue generated above local mill rates be sent to Hartford to redistribute to municipalities with higher mill rates. Greenwich taxpayers will be forced to partially pay to fund other municipalities’ spending.

This is a Democrat’s dream. They’ve been desperate to establish a toehold with a statewide property tax scheme for years. Such a scheme would slam Greenwich taxpayers disproportionately. Democrats’ end game is a statewide tax on all property.

The car tax does have problems, but eliminating it without strategies to restore the revenue won’t work and Malloy offered none. Instead he should empower local governments to decide themselves whether to keep the car tax, including multi-year phase out options, and allow local officials to set a lower auto mill rate. This will create local debate on community needs, looking at the value of revenue generated by taxes on cars compared to other properties and whether to cut spending.

This makes the most sense, but would deny Malloy the political boost he’s seeking. The car tax issue is complicated and mostly political and the end result could have a very deleterious impact on Greenwich citizens.

 

Ed Dadakis is former chairman of the Republican Town Committee and has spent more than 30 years serving on the Representative Town Meeting (RTM). He may be reached at [email protected] 

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