A Tale of Two Taxes

The Herald this morning reported that Carrboro is requesting that the legislature grant authority for two tax increase. The funds are apparently needed to support rising costs for the bus system.

The first is a doubling of the motor vehicle license tax to $30 per vehicle. In one sense, this seems sensible to add costs to a behavior that you want to discourage to fund one you want to support. Nonetheless, this is a regressive tax. The only people the extra $15 might hurt are those truly at the margins financially. Still, I wouldn't quibble over $15.

More problematic is the second proposal which is to increase the sales tax from 2.5% to 3%. The sales tax is notoriously regressive. Carrboro's working poor will be hurt by this tax.

Both these items are on the agenda for discussion with the legislative delegation and were placed there by a unanimous vote. It's truly shocking that none of the Aldermen voted against a resolution with the sales tax provision. Hopefully it will die in discussion with the legislators if not before then.

[Note: the Herald also reports that Chapel Hill's Mayor Foy supports both tax increases.]




As Terri notes, people who use the outlying park-and-ride lots are not charged for use of the bus system. UNC generates most of the money needed to cover its share of the bill by charging high prices for the use of on-campus parking. The idea is to penalize the behavior campus officials want to discourage (single-occupancy vehicle use on campus) and reward what they view as positive behavior (using park-and-ride and transit). As one might imagine, this is not an entirely popular idea among commuters, as the regular set-tos about parking policy among the various campus advisory and interest groups would suggest.

The irony being that, if there was all the parking some would like to see on campus, many might find their offices forced to locate out where the park and ride lots are now.

At the Transportation Board meeting this evening, the staff announced an 11% increase in bus ridership last year.

I'd say that's an excellent return on town funds.

Wow. Ihadn't thought about Bulwinkles in a LONG while. Talk about a place with CHARACTER...Grad students by day, biker bar by night.

At the risk of making an unproductive comment that will be ignored, I do find myself wondering WHY the Alderpeople would appoint citizens to a board that CLEARLY disagree with the Alderpeople? The board has the final say onall appointments.

Did anyone else find it interesting that the Board is considering changing the Northern transition area they just annexed from residential to "mixed use"?

From today's Herald:
"One option, board members said, is to reserve land for businesses in the 300-acre swath north of the town the aldermen annexed last month and officially will take over next January."

And additionally:
"Zoning in the annexation area is currently residential. The aldermen, however, discussed writing an economic development plan for that area before they take over it and have the power to switch zoning."



Couldn't taxing a vehicle by weight cut both ways? If I'm a low income family, its possible the only car that I can afford to own and operate is an older car--I'm thinking a mid-1970's tank that easily weighs 4000+ lbs...The tax structure may address people's choices but not in the way you'd expect...

Bill, that is indeed possible. Another potential criterion one could introduce is an emissions rating- more polluting cars pay more, etc.

But this presents another variety of the same problem you mention, namely that older cars (which are cheaper) tend to be more polluting than the newer used vehicles across similar body types.

There's a particularly wide gulf when you cross the time period when most cars started coming with a catalytic converter installed. (early 80s?)

Maybe the weight requirement would only be applied to vehicles manufactured within the last ten or fifteen years, and beyond that there is a standard fee in the weight category?

I agree that a weight/tax value/emissions package of analysis to yield a registration fee isn't perfect. However, it may offer a greater opportunity to build in progressive taxation components than a simple $X per car fee, while giving the appropriate market signals about harm to the environment and road infrastructure, which we all pay for collectively.

Patrick or anyone else who might know,
Do other cities generate much revenue for their bus systems by accepting advertising? It's an ugly idea worth looking into.

I wish I had a better map so I could figure out what land is available for commercial development in the NTA. From what I can see, it looks like nothing much is available unless homeowners sell out. I wonder what the aldermen have in mind?


Another possibility would be to make the registration fee tied to the value of the car. So if you buy a $60,000 car and you want to register it, you pay a fee based on some % of the value. If you bought a $60g car, then you could probably afford a $60 registration fee (I hope!). If you register a $500 car, you pay $5.

That way, you sort of cover the emissions problem/lower income car in one bundle. I'm assuming that most of your real polluting new cars are probably pretty pricey (SUVs, Hummers, etc) and that most of your cheaper new cars are mostly fuel efficient...

Sounds good, Bill.

Hey, Y'all-

Been lurking in bits and pieces. This conversation's had many interesting twists that I'd like to respond to in detail but, despite intimations made above that we elected types are ducking the forum, some of us are absolutely swamped with work (Try doing Town work, administering an estate and working for a living all at the same time--can you say STRESS?--see how much time you have for blogging).
I've got a slow moment at work, so I'll try to slam out a couple quickies--more detail later.

Dan's absolutely right about the regressive nature of the fees/taxes being proposed. The problem,is that the General Assembly simply won't authorize more progressive mechanisms.

For example, We've tried for years to get a progressive 'impact tax' on new development instead of the regressive 'fee' that's currently in force--to no avail. It's been spiked at the outset by the powerful Homebuilders' and Realtors' lobbies before it gets to 'go'.

Only after many years of perseverance (and gaining seniority) was Paul Luebke able to raise the 'cap' on the Highway Use Tax (that 3% you pay when you purchase a vehicle) that allowed Hummer drivers to get off with nearly the same tax as my old heap.

The same dynamic applies here. The proposed motor vehicle registration charge is technically a 'fee' not a tax. It's long been held that a 'fee' must be a flat charge, where any progressive mechanism is a 'tax'. Hence, the wise folk in Raleigh can approve a 'fee' and still say the didn't 'raise taxes'. Moreover, 'fees' engender less resistance from big-money lobbyists because of its regressive nature--It doesn't affect their fat-cat constituents. It's all BS, but that's how things work over there.

Sales taxes are much the same way--However, it must be pointed out that the sales tax idea is contemplated on a regional basis to help provide revenue for the regional system. As well, some counties have expressed interest in using some portions (if approved) to help with Medicaid costs that are being devolved onto counties (North Carolina is one of only two state employing this shameful septic effluent+gravity formula). You'll notice that W's proposed budget allocates bupkis for the triangle's regional transit, but funds Charlotte's transit projects (see Pat McCrory--Republican fund-raiser extraordinaire).

So, Bill's idea is a terrific one (and been tried) and we can certainly pitch it to the delegation, but I don't hold out a lot of hope. So, am I a defeatist sellout? You decide. But in over 10 years of grass roots lobbying in Raleigh on behalf of advocacy groups and the town, I'm afraid not much is gonna change until we get real campaign finance reform. Until then, ya do what you can.

a note on contemplated land-use changes: Don't believe what you read in the paper. we are NOT contemplating zoning changes for the recently annexed areas. Those are already built-out residential zones (That's what allowed the town to annex them). We are merely contemplating identifying sites that may be best suited to Village-Mixed-Use, and Office Assembly. These are already 'permitted uses' with some restrictions, in the Transition Area, as 'floating zone' designations, but not identified for particular tracts. Whether this is a good idea or not is certainly up for discussion, but more about that later, and If this doesn't make sense, i don'thave time to edit now. I'm f***ing BUSY! BYE.


Glad you clarified that, ALex. You might want to get the paper to print a retraction...or publish the transcripts of what was ACTUALLY said. Honestly--it sounded rather--PUNITIVE--as it was reproted.

Bill, my original suggestion was a combination of tax value and weight.

I think you'll find that there are expensive vehicles with lower emissions profiles and cheaper vehicles with higher emissions profiles, which is why I also propose getting the weight of the vehicles involved.

While the 2004 Hummer H2 now is an expensive vehicle, once it is 8-9 years old, its tax value will be much, much lower, which means over time, those buying 2004 $50k Hummer H2s pay less than those buying the 2004 $76k jaguar XK8s. This isn't fair as the Hummer causes much more road damage and certainly more environmental damage.

Check out this link to compare those two models and see why weight is better at getting the environmental polluters than cost.


autotrader.com is where I am pulling cost data for comparison.

Off topic note to Patrick: Great job on getting the bus line approved between Hillsborough and Chapel Hill.

Clarification- the Hillsborough to Chapel Hill route still remains a PROPOSAL, though you would not get that idea from the Daily Tar Heel story that ran today.

This proposal will go through the TTA Board for approval over the next few weeks and there should be a final decision on whether or not to run the route by late May.

Here's an article about DATA and advertising:

"...said DATA Administrator Steve Mancuso. "This is a promising program which will be beneficial to Durham businesses and will allow the City to tap into a new source of revenue." Generating ad revenue via transit systems is an idea that has caught on in other cities in North Carolina including Winston-Salem and Greensboro.

The issue with bus advertising is that the real money is in the 'whole bus wrap' paint job. This rather garrish approach is not so, so bad when advertising Wayans Brothers reruns, but when combined with even more tasteless subject matter it doesn't really seem worth the money.

Or at least that is what we concluded about the matter 8 years ago when this was discussed by the Chapel Hill Town Council. But it would be interesting to find out just what kind of revenue we are talking about . . .

To answer the obvious question: Playboy, Captain Morgan's Rum or Camel Lights.

The obvious…I was thinking real estate agents, orangepolitics coffee mugs, and goats milk soap (subsidy for that one)…
Don't think of advertising as a sellout; think of it as a way to help finance no fare buses and save the environment.
You know, we can have advertising guidelines…
Of course, if advertising doesn't generate substantial revenue, it's not worth it.

This just in from the Common Sense Foundation:

Consider This…


Thus far in the legislative session, it's all about soaking the poor.

The options being floated to solve the budget shortfall problem are all highly regressive. Few ideas that distribute the burden more equitably are getting any traction at all.

The lottery is a hot topic, even though its prospects for passing don't look good. Despite constant carping that a lottery would be a “voluntary tax,” research shows that the poor would be far more likely to play than would wealthier folks.

A cigarette excise tax increase is another revenue-producer that has a far better chance of making it out of the legislature. But that would be just as regressive, since poor people are more likely to smoke.

The sales tax is less unpopular among legislators than most other levies, but it is a classic regressive tax. The half-cent sales-tax increase that was scheduled to end this summer may well live on, and the burden from it would fall disproportionately on those who can least afford it.

What's the answer? Income taxes, decoupled estate taxes, closing of loopholes—there are numerous ways to raise revenue without doing it on the backs of those who cannot afford high-powered lobbyists in Raleigh.



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