July 10, 2013

New Haven Register: Reconfigure tax system for transportation

media mention

(Original Post)

Published: Tuesday, July 09, 2013
Some middle-class and wealthy Connecticut people point to government aid programs and services and say that poor people get a lot for nothing. But the working poor pay about 11 percent of their income in taxes compared to a little less than that for middle-income payers and just 5.5 percent for the wealthiest folks, according to an analysis by the Institute on Taxation and Economic Policy.
That leads us to regressive taxes in this state, including the high sales tax. But transportation-related taxes are the ones we especially find troubling this month — with the gas tax having just gone up during vacation season and municipal car taxes due at the end of July.
The gas tax increase that went into effect July 1 was based on a schedule passed eight years ago during the administration of Gov. M. Jodi Rell, notes state Senate Majority Leader Martin Looney, D-New Haven. OK, but that doesn’t make it palatable in a state with high gas prices.
With a one-year moratorium, the increase went into effect partly because there are no tolls in Connecticut and the state relies more heavily on gas taxes, say legislators.
Car taxes can be galling and punitive based on where you live. The same car worth, say, $12,000 in book value will be taxed at about $350 or less in the average wealthier suburb but almost $500 in New Haven and more than $800 in Hartford due to different tax rates (the percentage expressed in mills).
We understand that a given house on the shoreline is worth more than the same house in the inner city, which is reflected in its assessed value. “But a car is a car is a car,” says Looney. “It really seems unfair to have the same car taxed at radically different mill rates in different municipalities.”
Amen to that.
The state needs revenue to maintain its transportation systems. Otherwise there would be potholes swallowing cars on highways. But as advocates for the poor have pointed out, transportation costs make up a surprisingly big percentage of expenses for the working poor.
Gov. Dannel Malloy tried to scrap the municipal car tax last General Assembly session, but the plan left a revenue gap for cash-strapped municipalities.
Some legislators favor an alternative plan: A statewide motor vehicle tax with the same rate applied across the state. The money goes to the state and is sent back to the municipalities based on need.
As for the working poor, legislators point out that the state passed an earned income tax credit two years ago that really helps some 180,000 families. It’s a great program for those who work and have children, and should be maintained. An increase in the minimum wage in January should also help the working poor, Looney said.
Because no one wants interior highway tolls every so many miles for safety and nuisance reasons, the state must look at border tolls. Putting tolls at the border is opposed by border-area legislators, but there’s no other way to tax out-of-state drivers for using state roads.
In the meantime, the gas tax may be unavoidable to maintain infrastructure, but portions of it should not be diverted to the general fund, and the state needs to pinch pennies to get the most out of its budget — just as families who are strained by health care and transportation costs are doing. With saner spending, border tolls and fairer car taxes, we can then put in a law where gas taxes are lowered every year instead of the opposite; how about that?

Published: Tuesday, July 09, 2013

Some middle-class and wealthy Connecticut people point to government aid programs and services and say that poor people get a lot for nothing. But the working poor pay about 11 percent of their income in taxes compared to a little less than that for middle-income payers and just 5.5 percent for the wealthiest folks, according to an analysis by the Institute on Taxation and Economic Policy.

That leads us to regressive taxes in this state, including the high sales tax. But transportation-related taxes are the ones we especially find troubling this month — with the gas tax having just gone up during vacation season and municipal car taxes due at the end of July.

The gas tax increase that went into effect July 1 was based on a schedule passed eight years ago during the administration of Gov. M. Jodi Rell, notes state Senate Majority Leader Martin Looney, D-New Haven. OK, but that doesn’t make it palatable in a state with high gas prices.

With a one-year moratorium, the increase went into effect partly because there are no tolls in Connecticut and the state relies more heavily on gas taxes, say legislators.

Car taxes can be galling and punitive based on where you live. The same car worth, say, $12,000 in book value will be taxed at about $350 or less in the average wealthier suburb but almost $500 in New Haven and more than $800 in Hartford due to different tax rates (the percentage expressed in mills).

We understand that a given house on the shoreline is worth more than the same house in the inner city, which is reflected in its assessed value. “But a car is a car is a car,” says Looney. “It really seems unfair to have the same car taxed at radically different mill rates in different municipalities.”

Amen to that.

The state needs revenue to maintain its transportation systems. Otherwise there would be potholes swallowing cars on highways. But as advocates for the poor have pointed out, transportation costs make up a surprisingly big percentage of expenses for the working poor.

Gov. Dannel Malloy tried to scrap the municipal car tax last General Assembly session, but the plan left a revenue gap for cash-strapped municipalities.

Some legislators favor an alternative plan: A statewide motor vehicle tax with the same rate applied across the state. The money goes to the state and is sent back to the municipalities based on need.

As for the working poor, legislators point out that the state passed an earned income tax credit two years ago that really helps some 180,000 families. It’s a great program for those who work and have children, and should be maintained. An increase in the minimum wage in January should also help the working poor, Looney said.

Because no one wants interior highway tolls every so many miles for safety and nuisance reasons, the state must look at border tolls. Putting tolls at the border is opposed by border-area legislators, but there’s no other way to tax out-of-state drivers for using state roads.

In the meantime, the gas tax may be unavoidable to maintain infrastructure, but portions of it should not be diverted to the general fund, and the state needs to pinch pennies to get the most out of its budget — just as families who are strained by health care and transportation costs are doing. With saner spending, border tolls and fairer car taxes, we can then put in a law where gas taxes are lowered every year instead of the opposite; how about that?

 

 

 





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