Senator Schumer proposes 10% annual tax on collector cars
Senator Schumer proposes 10% annual tax on collector cars
--------------------------------------------------------------------------------
Senator Eyes Collector Cars as Revenue Source
New York Times article Mar.28, 2011
Auto Enthusiasts who dodge taxes are in Schumer's crosshairs
Washington, D.C. - AP. Senator Charles Schumer (D-NY) held a press conference today in the Capitol's rotunda and stated that he is in the process of drafting a bill that will create a federal tax on all collector, antique, historic, special interest, hot rods and race cars. "This country is operating at a huge budget deficit," said Senator Schumer, "thanks to the previous administration's failure to seek new sources of revenue.
We can no longer continue to just raise the taxes we already have. We are reaching the point of diminishing returns. We must find new sources of revenue. "There are more than one million collector cars in this country,"said Schumer, "and many of them are unregistered and untaxed. These vehicles represent sometimes sizeable assets which often appreciate from sale to sale. Much of these capital gains remain untaxed. It's about time these collectors—all of whom are rich—begin to pay their fair share. I've never heard of a poor person owning a Corvette, Ferrari, Deusenberg or Cobra." Citing the results of this year's automobile auctions in Scottsdale, Arizona as an example,where reported sales were in the tens of millions of dollars, Schumer said, "We're not talking about rusty old clunkers, here.
Some of these cars represent the pinnacle of automotive history. Collectors who buy and sell them often do so privately. Some transactions are in cash and others include trades. All of these are under the Internal Revenue Service's radar. Well, that will soon end."Each state has different laws and requirements for collector cars. Those which tax them as personal property often use outdated values. An owner can pay taxes on a car the state determines is worth $5,000 and then turn around and sell it for $100,000 or more. Until now, all of this has been the purview of each state. Schumer's law will sidestep all state laws by levying a federal tax in addition to anything the individual states do.
This new federal tax will be similar to the present federal tax on gasoline, which is in addition to whatever a state assesses. Part of the Schumer law includes the IRS opening up a special department to deal with collector cars. Values will be calculated annually and owners will be required to list all cars they own on their 1040 tax form. Because not all vehicles are registered, and thus may not be known to the individual states' motor vehicles departments—especially race cars which are not driven on public roads—the IRS will make use of the existing network of individual collector car enthusiast organizations across the country. Many of these car clubs maintain accurate registries which detail each car by its vehicle identification number and present or last known owner and their location. Assembling an all-inclusive federal database in conjunction with these registries will be one of the first steps in implementing the new law.
Once the database of owners is cross-referenced with an annual index of current collector car values, every collector or race car in the country can be taxed at a fair rate. Initially, Schumer says, it will be 10% but that would rise depending on the type of car, number produced and condition. "Collectors are willing to pay more for certain cars," said Schumer, "because of their history or the small number that were produced. These factors increase a vehicle's worth to buyers, so why should these cars not be taxed at a higher rate? It's no different than our current progressive income tax rate." It is estimated that an annual 10% tax on all collector cars presently owned by American taxpayers—at their prevailing market value—would be more than $250,000,000.
In four years the coffers of the federal government could be fattened by a billion dollars. "That's only a conservative estimate," said Schumer. "Nobody knows exactly how many collector cars are out there. But by this time next year, WE will know. Owners of these cars will finally have to pay up.Their free ride—on the backs of the poor—is over."
__________________
