Letters to the Editor

No reason left to protect cap on car tax

I got T-boned last month, and I learned a lot from the experience.

I learned that those people who stop to help out after an accident aren't busybodies like I had always imagined but lifesavers. Bill Harmon and Jane and Ken (I didn't get their last names) didn't pull me or anyone else to safety or push our disabled vehicles out of oncoming traffic. But it meant the world to have them there, both before and after the firetruck and EMS arrived. To point out that I wasn't going to be able to drive my car home (which should have been obvious but hadn't occurred to me). To offer to drive me. Just to talk about the wreck - and things other than the wreck. Maybe I would have been fine without them, but I'm glad I didn't have to find out.

I thought I learned the Richland County EMS had come up with a pretty audacious new way of collecting money: Find insured accident victims and bill them for a call, even though they didn't call EMS, weren't injured and agreed to let the paramedics look them over only so as not to make a scene.

I was all ready to write a column about this scam when I remembered the first rule of journalism: Verify the facts. Actually, I didn't have to remember that rule - it's etched on my brain, which makes Cindi a dull conversationalist when friends start talking about the latest national political outrage; I'm simply not going to stake out a position when all I know is what someone saw on TV.

And sure enough, this was a glitch. EMS director Mike Byrd assured me that while his department does have a $50 treatment/no-transfer fee, it only applies to people who call for help. EMS responds to all wrecks, and victims aren't charged unless they're transported or receive significant treatment. Occasionally, though, paperwork gets filled out incorrectly, and people are billed who shouldn't be; a call to the department's non-emergency line should clear it up, he said.

It was an important reminder of how easy it is to be just flat wrong when we succumb to our natural inclination to assume that anything bad that happens was done deliberately, or that we were singled out, or that government is always out do get us.

Finally, I learned something important about South Carolina's $300 cap on the sales tax on cars.

To explain, I need to take you back to 1984. Prior to that, cars had been taxed just like other merchandise. But in order to win votes to pass the Education Improvement Act penny, supporters agreed to an obscene list of tax exemptions. Among the supplicants demanding concessions were automobile dealers, who insisted that raising the sales tax from 4 percent to 5 percent would be the end of their livelihoods, because South Carolinians would race across the state line to North Carolina or Georgia, both of which had caps on the car sales tax.

That always struck me as a bogus argument, but legislators tend to be gullible when they're talking to people who make generous donations to their campaigns. So they approved a $300 cap. I'm told that auto dealers promised they would support lifting the cap if North Carolina and Georgia ever did the same. North Carolina and Georgia both did - North Carolina now charges a 3 percent "highway use" tax on automobile purchases, and Georgia a 4 percent state tax and 3 percent local tax - but the auto dealers have lobbied ferociously against any and all attempts to eliminate or even raise our cap.

The result is that, as the Taxation Realignment Commission explained in its report recommending a gradual elimination of the cap: "a resident purchasing a $6,000 car pays an effective sales tax rate of 5 percent - a rate that is 10 times higher than a resident buying a car that costs $56,000, whose effective tax rate in South Carolina is just 0.54 percent - a tax rate 10 times less on a car that costs 10 times more. Simply put, that is the definition of a regressive tax."

(And no, the fact that property taxes on cars are steep does not make that OK, any more than I should be excused from paying taxes on my income if I use it to buy a lot of stuff that's taxed. If it were logically possible to argue for a lower car sales tax because of the property tax, the argument would be for a lower rate for everyone; TRAC figures show that a 2.3 percent sales tax on all cars would bring in the same amount of money as the $300 per-car tax.)

Anyway, back to North Carolina, which is where I bought my replacement car, not because of the tax rate but because that's where I was able to find what I wanted on short notice. It turned out that I didn't have to pay North Carolina's 3 percent tax, because when North Carolina eliminated its tax cap a decade ago, it stopped charging a tax on vehicles registered in other states. Dealers charge S.C. residents the $300 S.C. tax, and send it to South Carolina along with registration information. North Carolina's DMV calls this a "dealer courtesy," which saves South Carolinians from all the trouble they'd get in when they forgot that they are required to pay a use tax on any untaxed items they purchase in other states. Georgia likewise charges its sales tax only on vehicles registered in Georgia; a dealer in Augusta told me that dealers there also collect the S.C. tax as a courtesy.

What this means is that our low sales tax isn't stopping South Carolinians from crossing state lines now to buy their cars, because we pay the same thing across the border. More important, it means that South Carolinians wouldn't have any new reason to cross state lines to buy cars if South Carolina charged an even higher tax than North Carolina or Georgia.