Kadner: Cook County should repeal this car tax
By Phil Kadner email@example.com April 19, 2013 11:10PM
Elizabeth Doody Gorman | Sun-Times Media
Updated: May 22, 2013 6:36AM
If you buy a used car from a neighbor in Cook County, you could get a tax break later this year.
Used-motorcycle buyers may also see some relief, but that’s a really confusing situation.
In November, I wrote a column about Steve Kelly, of Evergreen Park, who bought an old van with nearly 300,000 miles on it for $500. He was stunned when he got a notice that he owed $175 in tax on the purchase of the van.
That’s a Cook County tax on the person-to-person sale of used vehicles that didn’t previously exist.
There has been for many years a county tax on vehicles purchased from a dealer, but ordinary folks who bought used cars from each other were not taxed.
The new tax is officially known as the Cook County Home Rule Use Tax for Non-Retail Transfers of Motor Vehicles.
Hardly anyone noticed when the ordinance was passed as part of the county budget in November 2011.
Then the tax bills started to arrive in the mail last year after people applied for the title of a used car they had bought from a friend or neighbor.
When you write a column about a tax that seems blatantly unfair, you hope people will read it, call their lawmakers and that elected officials will respond appropriately.
And that’s sort of what happened here.
County Commissioner Liz Gorman (R-Orland Park) heard from constituents and fought for changes in the ordinance.
“Someone I know basically gave a 20-year-old car away to someone down on their luck, and that person was hit with a $175 tax,” Gorman said. “Hearing stories like that and reading your column, I decided something had to be done because this tax was hitting the poorest people.”
Gorman approached county board President Toni Preckwinkle about the possibility of repealing the tax.
“The good thing about President Preckwinkle is that although she’s a Democrat and I’m a Republican, there is none of that political partisanship on the board,” Gorman said. “She listens to anyone who has a good idea.”
Preckwinkle, however, wasn’t willing to give up the estimated $7 million a year the used-car tax is expected to raise.
So she introduced a compromise amendment last week (co-sponsored by Gorman) to lower the tax on the transfer of motor vehicles between county residents.
If approved by the county board, beginning Aug. 1 an individual acquiring a motor vehicle nine years or older will be subject to a $90 tax. For those obtaining vehicles four to eight years old, the tax would be $175, and a $225 tax would be imposed for vehicles three years old or newer. A $25 tax will continue to apply to transfers between immediate family, business transfers under certain circumstances and transfers to beneficiaries of an estate.
Previously, transfer of a vehicle five years old or newer carried a $225 tax, while it was $200 for vehicles between six and 10 years old and $175 for those 11 years or older.
“Government needs to be responsive to the concerns of its residents, which is why we are implementing a more equitable policy with lower tax rates,” Preckwinkle said in a statement. “We listened to people from all over Cook County, and worked with members of the county board to fashion a fair and sustainable compromise.”
Gorman said the proposed amendment is the “right thing to do. We should not be placing an unfair financial burden on our county residents, especially those who are on the lower end of the earning scale.
“After initial discussions for a full repeal of the tax, this compromise reached with the president’s administration is a step in the right direction. This amendment will make it more fair and equitable for person-to-person car buyers.”
The amendment, however, would create a new $90 flat tax on the sale of used motorcycles between private citizens.
But that actually could be a break because Cook County was taxing used-motorcycle buyers at the same rates as used-car transfers, although motorcycles were not specifically mentioned in the original ordinance.
“I don’t see how you can tax motorcycles if motorcycles aren’t mentioned in the law,” Gorman said. “Did they tax motorcycles because they have wheels? What next, tricycles and bicycles?”
A spokesman for Commissioner John Fritchey (D-Chicago) said he discovered motorcycle buyers were being hit with the tax when complaints came into his office. Fritchey originally proposed an amendment to set the motorcycle transfer tax at $25.
When Preckwinkle notified Fritchey that the ordinance was to be changed, he withdrew his proposed amendment.
“The problem was that the county was unable to differentiate between motorcycles and cars from the state’s paperwork,” the Fritchey spokesman said.
A spokesman for Preckwinkle said the original ordinance simply failed to differentiate between cars and motorcycles.
It sounds to me that, without specifically including motorcycles in the law, the county just decided to tax the used-bike buyers anyway.
A $25 tax will apply to the transfer of a motorcycle title between immediate family members.
The amendment containing the lower taxes for used vehicles and motorcycles was referred to the county board’s finance committee for consideration.
I hope the board will consider repealing the tax on cars more than five years old — vehicles that low-income people often purchase to get to work or that high school or college students buy as their first car.
Since voters demanded the repeal of a 1-percentage-point sales tax hike passed during the administration of former board President Todd Stroger, Cook County taxpayers have been hit with myriad tax and fee increases in an attempt to recover that revenue.
I am not a knee-jerk anti-tax or anti-government guy.
But taxes ought to appear fair to the people who pay them. This one does not.