Colorado has a money problem:
9Wants to Know discovered Colorado is failing to collect hundreds of thousands of dollars every year from some drivers, which could pay to repair the roads. The drivers are avoiding state taxes by registering their expensive vehicles in states like Montana that have no sales tax and low registration fees. The drivers form a business entity in Montana which then can legally register the vehicles in Montana.
Why is it happening?
Drivers who avoid Colorado taxes by illegally registering their expensive motor homes, cars, boats and planes out of state complain that Colorado state taxes and registration fees are too high.
But leave it to the crack squad at 9News to answer that assertion boldly!
But it’s not true.
Well, that settles it.
Actually, let’s look at what they say to justify the “it’s not true” response:
A review by 9NEWS shows other than five states that have no sales tax, Colorado has the lowest state sales tax in the nation at 2.9 percent.
Which is then piled upon by counties and cities and transportation agencies also looking to make a buck, with the end result that I pay closer to 9 percent than, you know, 3 percent. This doesn’t make much of a difference when buying a week’s worth of groceries, but if you’re buying an $80,000 motorhome…
However, the complaint is not that the sales tax is too high compared to other states, but that it is too high in general. If California jacked their sales tax to 92%, it wouldn’t save me a penny in Colorado. Similarly, if the State of Colorado kicked me in the nuts weekly, it wouldn’t make me feel better for them to justify it by saying “yes, but Florida does it hourly.”
End result: I’m going to buy a big ol’ Montana cup for my goolies.
Colorado’s motor vehicle registration fees are also among the lowest in the country, according to the Colorado Department of Revenue. Colorado ranks 35th out of 50 states for motor vehicle fees per capita.
Per capita strikes me as a pretty useless measure for comparing motor vehicle registration fees between states. Not only do the fees vary, but so do the demographics and the infrastructure that can affect how many actually buy vehicles – and what kind they buy.
How about an actual comparison of fees paid on a specific model and year of vehicle?
I’ll start you off: in 2006, the registration fee for my 2006 Ford Fusion was almost $500. This year it was nigh on $400. Conversely, in Alabama, when I bought my 1996 Mazda MX-6, my registration fee was maybe $80-100. I think by the time I left, I was paying a whopping $17 a year or so. It’s going to be quite some time before my Fusion costs so little to have the right to put it on the roads of Colorado.
And, mind you, this car only cost $24000.
So, yes, 9News, the problem is that sales tax and registrations are too high in Colorado; missing the point and creatively playing with numbers won’t change that. Continuing to assess these rates, rather than seeking something more reasonable, is the difference between collecting nothing and collecting something – and that leaves one’s face without a nose.