Cut the Car Tax for Kids--and Families

Twenty years ago, California voters passed Proposition 13 and sparked a tax revolt that led to the election as president of Ronald Reagan, the most anti-tax politician since the days of the Boston Tea Party.

In all respects but one, the circumstances then were not much different than they are now. California’s economy was booming, and state government was blessed with a revenue surplus that put the budget billions in the black.

But a liberal Democrat held the governor’s office. Along with his liberal Democrat chief of staff, who now wants to be governor, and the liberal Democrat state Legislature, he refused to return any of that money to the people.

Happily for California taxpayers, that circumstance has changed.

I understand what Jerry Brown couldn’t: that state government already spends plenty of its citizens’ money and that Californians are taxed enough, and they won’t tolerate the big spenders in the Capitol hogging every penny of the surplus.

That’s why I’m proposing to cut the car tax,or vehicle license fee. The fee is a 2% tax on the value of every motor vehicle in California. Under my proposal, we’ll immediately cut it in half and thereby return to taxpayers almost $1 billion of the state’s $4.4-billion surplus. In fiscal year 1999-2000, the first full year of implementation, the cut will amount to $2 billion in taxpayer relief, the single largest reduction in California history.

Over the next four years, we’ll once again cut the fee in half, leaving it at just one-fourth of its present size. That adds up to more than $3.6 billion in annual savings to California taxpayers.

I’ve targeted the car tax, which averages $185 per vehicle per year, both because it’s so broad and because it’s sneaky and misleading. It masquerades on people’s registration bill as a fee that funds the Department of Motor Vehicles, Caltrans and other road-related services. It isn’t.

In reality, the money it raises is funneled through Sacramento to local governments. Because of this, some have charged that cutting the car tax will put local governments at risk.

Not so. To ensure that towns and cities can continue to meet their public safety needs, my proposal includes a statutory requirement to ensure no loss of revenue to local governments. Every dollar we take out for car tax reduction, we’ll replace with $1 from the general fund. So California taxpayers win, and neither local governments nor anyone else loses. Who could be against that?

The big spenders in Sacramento, that’s who. They’re making a lot of noise right now about how we need to invest all of the surplus in public education. But they either don’t understand or won’t admit that the kinds of reforms public education needs the most--teacher testing, quality control, greater parental involvement--don’t cost much.

And they’ve been for the most part conveniently silent about my proposal to spend a major portion of the surplus--a half billion dollars above Proposition 98 requirements--on precisely those needs of public education that do cost money, like new textbooks and remedial programs.

The arguments against this tax cut just don’t hold water. The fact is, the car tax was imposed, and then raised, in lean times with the justification that it was a necessary stopgap measure to save the state from cutting vital services.

Now that we’re enjoying such good times, it’s only fair that this stopgap measure be reduced, especially since no vital services are at risk.

In a state where the automobile is central to our way of life, the positive effect of this tax cut will be felt across the broadest possible spectrum of our society. And for those working people for whom their cars are an absolute necessity, it will be especially welcome, because the car tax swallows up such a proportionally large share of their income.

Back in 1978, the people had to force their elected officials to return some of the surplus to its rightful owners. They shouldn’t have to again. I hope the Legislature will see the writing on the wall and join me in cutting the car tax.