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What the Proposed Trade-In Automobile Tax Means for Connecticut Car Buyers Today
The proposed auto trade-in tax is all over the papers, blogs, tv and twitter. Jill Merriam, owner of Key Hyundai of Milford and Manchester explains what this tax means for Connecticut car buyers today.
By: Jill Merriam
Jill Merriam, owner and operator of Key Hyundai of Milford and Manchester (http://www.keycars.com/)
Key Hyundai sells cars to hard-working folks throughout Connecticut, and with this in mind, Jill Merriam is sharing exactly what the proposed auto tax means when car shopping for a new vehicle: Hyundai or otherwise.
The Skinny on the Proposed Connecticut Car Trade-In Tax
When customers trade in their car, in whatever condition, Key Hyundai (and most CT car dealers) credits the value of the trade into the purchase price of the new car. That means buyers receive a tax credit on the new car for the value of the trade in.
“How much will you give me for this?” is often how it’s presented to car sales. Key Hyundai, for example, is offering an incentive for cars brought in for trade, which means until March 31st, Key Hyundai will pay off your trade.
If a trade-in is worth $4000 deducted from the purchase price of, for example, a 2011 Elantra at $18,000. Do the math:
18,000 – 4000 = 14,000
Your new car will cost $14,000 plus registration and documentation.
Plus 6% sales tax: $840.
Except when the new tax trade-in allowance is removed.
Then your new car will still cost, $14,000 but you will be taxed on $18,000.
6% taxes: $1,080
That’s a lot of gas. Or really, not-so-much at $4+/gallon.
By eliminating the tax exemption for trade-ins, customers must then come up with additional cash: how much depends on the price of the car purchased.
But wait – there's more: A 3% tax on luxury vehicles: cars over $50,000
The luxury tax affects less Hyundai customers, but now that Key Hyundai sells the luxurious Equus, we too will be affected. However, the luxury vehicle tax may be worth it for this ride, because this Equus is so impressive, buyers may not care how much tax is slapped on the bill. Yeah, it’s that nice.
But not all cars over $50k are luxury expenditures like the Equus. Some are work vehicles: heavy equip, SUVs, snowplows, and trucks are subject to the same luxury tax, despite the lack of said luxury. It is going to be tough out there people, very tough.
Governor Malloy is trying to make ends meet. Key Hyundai understands that.
“I pay taxes, and just like my most of my customers, I live and work in Connecticut,”
“My car dealer colleagues are arguing and fighting against future job loss in our industry,” said Merriam. “We compete against each other, but unite to save an industry already sucker punched by a dire economy.”
The bottom line on the proposed Auto Trade-In Tax
"Buy a car now if you are concerned about taxes going up," said Merriam. "As the saying goes, taxes are one of the only certainties in life, and Connecticut – they aren't going down any time soon."
*This release adapted from Jill Merriam’s Blog at http://cthyundai.com/
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