Rebel With a Cause

Paul Goldman

The Car Tax Scam


Most Virginians should be paying no car tax in 2003. But Gov. Jim Gilmore pulled a bait and switch that leaves average families paying more than promised in his campaign five years ago.


Right now almost all Virginians pay a personal property levy on their cars, despite GOP Governor Jim Gilmore's 1997 campaign promise to end the car tax for most people. Most observers and GOP politicians blame this failure on what they describe as an "unexpected" budget crisis. But the fiscal truth is this: There would be plenty of money to eliminate the car tax for a majority of Virginians if Mr. Gilmore had simply kept his campaign promise when the car tax was enacted in 1998, during his first General Assembly Session.

The GOP Governor and his party -- with my own Democrats as usual going along like sheep -- double-crossed the voters by passing a car tax repeal plan that was fundamentally different from the one promised during the campaign. Indeed, if my own Democrats and fiscally responsible Republicans had only listened to those of us urging Gilmore to honor his original campaign promise -- not their  bait-and-switch approach to be discussed below -- the current state budget would have enough money not only to eliminate the car tax for most Virginians but hundreds of millions of dollars to spare to improve education, ameliorate mental health services, and help the private sector create jobs.

So I say again, the so-called "unexpected" budget "crisis" is not the reason most Virginians still pay a car tax. The car tax could be eliminated for most Virginians right now with the money already available in the state budget. This would not require any "borrowing" against tobacco settlement revenues, any "raiding" of the VRS funds, or any more of the "three card Monte" fiscal tricks that are again in vogue in Richmond in certain circles.

Bottom line: The politicians in Richmond blame their inability to eliminate your car tax on the "budget crisis" in order to distract from the double-cross they pulled on you, the voters, in 1998. Like a bunch of used-car hucksters, they played bait-and-switch. They caved under political pressure from powerbrokers who forced a change in the car tax elimination formula to benefit their areas at the expense of other parts of the state.

Indeed, this bait-and-switch is one reason Mr. Gilmore got away with unprecedented fiscal recklessness during the 2001 General Assembly Session. Why? Simple political math. Under the original Gilmore campaign promise, more than half the voters -- and an even higher percentage in some parts of the state -- would be paying pay no car tax right now.

Thus, all these voters would not be pressuring legislators to cut the car tax further because they would receive no benefit! Accordingly, the General Assembly would not have rolled over when Gilmore broke state law and his promise to them by illegally raising the car tax repeal to its current 70 percent phase-out level. This action, discussed by me in a Washington Post article two years ago, has added a billion dollars -- and counting -- to the state's budget deficit.

In my view, the car tax should be eliminated. But as a commentator, I have to write honest analysis. This means pointing out that Gilmore "cooked" the state revenue forecast in December of 2000 to take an advantage of a loophole in the car tax law to force the 2001 budget stalemate, allowing him to raise the phase-out level to 70 percent when everyone in Richmond knew the true state revenue forecast made raising the phase-out level illegal.

If his original campaign promise had been enacted, Gilmore never could have gotten away with this maneuver because it would only have benefited a small percentage of voters. However, under the car tax law passed in 1998, almost all voters received some additional benefit from his illegal action thus cowering most legislators to stay quiet.

So, for those who want to know the true story of this GOP bait-and-switch, the following, as Paul Harvey might say, is the rest of the story.

Under the plan promised in 1997 by candidate Gilmore, the car tax would be eliminated on the first $20,000 in assessed valuation. This "elimination" was to be phased-in over five years by exempting an increasing fixed-dollar amount of the assessed value of the car up to the promised $20,000. Thus, the value of your car, not the amount of your tax bill, was going to be the basis of car tax relief.

Based on the GOP campaign promise, there is enough money in the 2003 state budget to totally eliminate the car tax for a clear majority of all Virginians based on the average value of the vehicles owned by state residents. Thus, most Virginians should now be paying no car tax.

However, this campaign promise later proved to be unacceptable to key Republicans - and probably key Democrats - from certain vote-rich areas of the Commonwealth. Naturally, there are no fingerprints, and, I must further state that when I asked a key member of the Gilmore Administration about this bait-and-switch, he denied it was due to any political deal, saying in effect it just "worked out that way" to paraphrase the actual words.

But I am not buying this denial because as we say in the South, if it quacks like a duck and walks like a duck, then it's a duck.

So let's cut to the duck walk right now. In Fairfax County, for example, there are a lot of key, swing Republican votes owning one, two or more cars valued at $20,000 and higher. Look what happens to an area like Fairfax County under the original Gilmore plan. Since the average value of cars there is far higher than the average value of cars in many other parts of the state, the original Gilmore plan meant that, as the phase-out progressed, most  Fairfax County voters still would be paying a burdensome car tax while, at the same time, the state would be paying money to other localities to totally eliminate the car tax for more and more, indeed most, of the residents of these counties.

Everything I know about politics tells me this: When this reality became clear to the politicians working in 1998 to put Gilmore's campaign promise into law, this situation was seen as a potential political problem in places like Fairfax County. The politicians could hear the voters asking: Why are my state taxes going to a phase-out plan that will totally eliminate the car tax for most voters in one area of the state while my neighbors and I still will be stuck with a hefty car tax?

So, while my Gilmore Administration biggie says the change was not politically motivated, look what just "happens to happen" due to the bait and switch: Now, under the plan passed in 1998, Fairfax County voters get the same 70 percent reduction in their bill as the voters in all the other localities.

But more important, the 70 percent reduction is worth far more to the Fairfax voters and those similarly situated than the voters in say the Western part of the state.

Coincidence? If you think this "just happened," then I have some land in Arizona to sell you which would be just perfect for your additional purchase of the Brooklyn Bridge.

Let me make the math even clear. Had the original Gilmore car tax -- the one promised in the campaign -- been enacted, the owner of a car with an assessed of $10,000 or less would now be paying no car tax at all; the owner of a SUV valued at $20,000 would be paying roughly 50 percent of his car tax bill.
However, under the bait-and-switch plan passed in 1998, the SUV family pays considerably less in car tax while the average Virginia family pays 30 percent more than they would have under the original plan.

The result: Here we are in 2003, and not only have the Republicans in the majority reneged on their promises, but they say there is no money to keep the state's promises in education, mental health, job creation and other areas. Yet, they have been able to find the money to continue to pay their record high per-diem "compensation" and another several million dollars a year in alleged "reimbursable expenses" that they refuse to document.

It is time to stop this "more for the politicians and less for the people" motto dominating the General Assembly. The Bait-and-Switch, "Give-me-mine first" Big Spending professional politicians are back, only this time they are the Republicans in control of the General Assembly.

This is one reason I believe we need a "Put K-12 education first" law enacted during the 2003 Session, to make sure the General Assembly lives up to the state's promises on education. Based on a February, 2002, report of the Joint Legislative and Audit Review Committee, the General Assembly's most important investigative body, the state is reneging on its promise to help alleviate the burden of local school taxes by $1 billion dollars a budget cycle.

How? Shortchanging the localities to the tune of $1 billion dollars in promised state support causes property taxes to be a billion dollars higher than it might otherwise have to be.

"Fool me once, shame on you, fool me twice shame on me" is an old adage we all know from our grade school days. The GOP fooled us once with a bait-and-switch on their car tax pledge. So let's not let them fool us twice with their reneging on the state's educational promise, voted into law by a referendum of Virginia voters in the 1970s.

Thus, my "Put K-12 education first" law will make sure future governors and future General Assemblies don't "Gilmore us" again.

-- January 13, 2003 


(c) Copyright. All rights reserved. Paul Goldman. 2003.


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Paul Goldman, the Rebel With a Cause, was chief political strategist for the past two winning Democratic governors in Virginia and was credited with leading a "revolution in American politics" by The New York Times for his role in breaking America's 300-year-old color barrier in national politics.