New Auto Repair Tax

BJC is back with news relating to the auto industry. Regardless of whether you seek to junk a car in Ravenna, Kenmore or Monroe Falls, we’re the best option for where to junk a car. The reasons are numerous but include: same-day old car removal, a fast price quote when selling a junk car over the phone and a wide service area for vehicle removal. As with most of the scrap yards that buy cars, we buy junk cars in any condition. (such as non-running vehicle or a totaled car) This article does not relate to the usual topics such as old car removal, selling a junk car or where to junk a car. In NC a controversial new tax that is a part of the budget. On September 26, 2015, Mark Barrett of citizen-times.com posted a story titled ‘Legislature Revs Up Tax…’ with the following info: “Jennifer Hartman sees a sales tax increase on car repairs as hurting customers. They are less likely to have options when things go wrong and have to keep older vehicles and can’t afford a new car. Randy Richards, of Precision Int’l says it’s a middle class & lower-middle class tax. If you’re upper class and driving a new car, you’re not paying for repairs because they aren’t needed or are under warranty. Tax changes like the car repair tax approved by the Assembly as part of a state budget will increase taxes paid by North Carolinians.

A commentator said people at the bottom will benefit from improvements in the state’s economy and will result from the lower amounts most taxpayers will pay. The bill cuts the personal income tax rate from 5.75% to 5.49 and an annual drop in the corporate tax rate that will see it fall to 3% down from 6.9% a few years ago. Legislators increased the standard deduction, the amount of income not subject to tax for those who do not itemize deductions, and restored a deduction for health care expenses. The bill extends the sales tax to maintenance, repair & installation of items whose sale is already subject to the tax. It also raises driver license, registration & fees by roughly 30%. A little more than half of the additional money expected from the sales tax will be dispersed to the state’s more rural municipalities. The types of purchases affected by the change are car repairs, installation of an appliance or repairs to a computer. Car repair businesses are already required to charge sales tax on items they sell. Under current law, they don’t charge sales tax on the labor–which makes up about half the cost of an average repair, so the change will effectively double the amount of sales tax people pay to get their car fixed.

The added expense could weigh into some decisions about whether to fix a vehicle or junk it, but the impact on most will be that they have less money to spend. Most will see a net decrease in the total amount of sales & income taxes they pay as a result of the bill, while some of the state’s poorest citizens will pay more, per the B&TC. The bottom 20% — those who make less than $20,000 a year — will pay $7 more a year in taxes. People between $20,000 and $34,000 in annual income, will save $10 a year. Those with incomes of $90,000 to $184,000 a year will get an extra $181 in their pockets. Those numbers don’t take into account the impact of higher DMV fees; the DMV changes will mean most of those in the lower 40% of the income scale who own a car will end up paying the state the more in taxes.” The complete story is available at this link.

This topic was addressed further in a September 19, 2015 article titled ‘NC budget: More sales taxes in 2016, income tax cuts in 2017’ composed by Colin Campbell on newsobserver.com with the following highlights: “The new state budget includes about $400M in income tax cuts, offset by new sales taxes on repair, installation & maintenance services. Whether this budget will save you money depends on how much you make, and how much money you spend on the newly taxable services. The 6.75% sales tax rate will increase the cost of a $750 repair to $800. Households making more than $95,000 a year would get an average tax cut of $476, according to projections. Unless they spend $7,000+ on taxable services, they’ll see a net benefit.

The Senate hopes to expand the sales tax–while lowering the personal income tax rate and move to a consumption-based tax. Republicans say sales taxes are a more stable revenue source–some economic studies back up that claim. In the recession, incomes in general go down; especially those taxed at the high ends, but people still spend money to survive. Walden pointed out studies that states that rely more on sales taxes didn’t necessarily fare better during the latest recession. When the economy is growing, income tax revenue will typically grow more than sales tax revenue. Overall, NC will get less revenue as part of the budget’s tax changes. Read more here: http://www.newsobserver.com/

Overall, this tax adjustment seems rather miniscule economically, but sheds light on the larger picture. Our Federal Government is far too large of a system and is completely mismanaged, as evidenced by a trillion in debt. What ever happened to the idea of having a balanced budget? The federal government defies the fundamentals of business and common sense. One example is the US Postal Service, which manages to defy all odds by LOSING BILLIONS every year. One interesting stat is that approximately 53% of spending is for the military[1]. The 2^nd largest expenditure is the government itself and this exceeds $72B annually. The state of NC is making adjustments within the range of a budget. Why can’t the federal government have to make responsible decisions like the states are required too?

Are you looking to junk a car in Ravenna, North Akron or the Chapel Hill area? Are you wondering where to junk a car for cash that includes old car removal? Perhaps you are asking yourself what the requirements are to junk a car in Ravenna, Streetsboro or Kent? Selling a junk car at Barberton Junk Cars is easier than you think. We are a local provider of cash for cars services that functions as a scrap car buyer and junk vehicle hauler. To scrap a car with us you need the vehicle title and your ID, which matches the name on title. We can be reached 6 days a week at (330) 732-JUNK or by visiting https://www.barbertonjunkcars.com.

[1] OMB, National Priorities Project