Monday, December 30, 2019

Illinois tax increase will benefit FIVE states that voted for Donald Trump

Liberals are bad at math everywhere, but starting January 1, 2020 the liberals running the state of Illinois will begin learning math the hard way. As an added irony, all five of the states that will benefit most from Pritz's folly are states that voted for President Donald Trump.

The New Year marks the effective date for a slew of new tax increases, passed by the Democrat-controlled legislature during their Spring 2019 money grab. These included a new gas tax, a new tobacco tax and 18 other "ways and means" signed into law by Governor J.B. Pritzker.

One of the most onerous measures is a trade-in tax, which will be applied to the value of a car with a trade-in value over $10,000.
The trade-in tax is particularly bad tax policy and cannot be justified as anything other than a revenue grab. The money isn’t even targeted to roads.

The state currently collects no sales tax on a car’s trade-in value, which acted as credit toward a new vehicle purchase. The sales tax only applies to the difference between trade-in value and the new vehicle’s purchase price, preventing residents from having to pay sales tax first when a vehicle was purchased new and then a second time when it was traded in. After Jan. 1 that trade-in vehicle will be taxed twice.

Any trade-in value above $10,000 will be subject to the full state and local sales tax burden, which is highest in Chicago at 10.25%. The tax is expected to cost Illinoisans $60 million. The state’s auto dealers are rightly upset about the dampening effect this is likely to have on car sales and have called foul on the double taxation aspect.

If you trade in a car valued at $20,000 before Dec. 30 to purchase a $35,000 vehicle, you will pay $1,311 in sales tax, which was only on the value of the new car above the trade-in value. But that exact same transaction will cost you $2,185 after Jan. 1.
You paid sales taxes when you first bought the vehicle. You pay the state the license and registration fee. You pay sales taxes on the new car and now you have the honor and privilege to pay taxes on the trade, to.

Auto dealerships in  Iowa, Michigan, Indiana, Kentucky and Missouri are cackling in delight. There is no stopping a car owner in lovely Mt.Vernon from driving an hour or so to St. Louis or Evanston to trade in their well-maintained Toyota Tundra and buy a new one. Who wouldn't spend a couple of hours to save a few grand? Now think of car owners in Chicago, who have options in South Bend, Gary, Racine and Kenosha.

Automobiles are your property. Once it's paid for, you can sell your property in any state in the union (or overseas, if you want). What you do with that money is your own business. You can put it down on a newer model. You can bank it for something else and sign a zero-down lease.

Automobile sales will be very hard hit in Illinois while sales in her sister states will benefit from a yuuge uptick in volume. You can't have used car sales without used car supply and St. Louis and South Bend is about to be swimming in a sea of inventory, all compliments of Pritz and his ill-schooled liberal friends in Springfield.


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