The battle against out-of-state registrations is heating up in California. The illicit practice, which sees in-state residents form out-of-state LLCs to register their high-priced exotics in places like Montana, is a well-known way to avoid registration taxes and emissions testing. For years, it’s been commonly referred to as the “Montana loophole.”
The loophole’s longstanding grey area of legality was dealt a serious blow earlier this month when California’s Attorney General charged 14 people with conspiracy, filing false sales tax returns, failing to file tax returns, perjury, and money laundering over their failure to report $20 million in luxury vehicle purchases, using the trick to skirt taxes.
Now, things are getting even more interesting. Just a few weeks following those charges, State Senator Jerry McNerney announced plans to introduce a new piece of legislation that would tighten up California’s legal definitions for residents to include shell companies like those used to register vehicles in Montana, when at least one member of that company is a California resident.
The Golden Era Of Montana Registrations Might Be Coming To An End
If you’re a gearhead who spends a lot of time online, you’re probably already familiar with the Montana loophole. Basically, to register a vehicle in Montana, all you need is an LLC registered in the state—you don’t need to be there, and you don’t need to live there yourself. The car is registered to the LLC, and, via a host of relatively affordable third-party services, you get plates and a title in the mail. Because the car isn’t registered in your state, you don’t have to pay taxes where you live. And because Montana doesn’t charge sales tax on vehicle registrations, you don’t have to pay tax to that state, either.
For years, rich people who don’t want to pay taxes on their high-priced exotics, folks who can’t get their vehicles to pass a state emissions inspection, and Kei truck owners whose home states refuse to register their mini pickups nationwide have used the Montana loophole without penalty. But it feels like lawmakers are finally getting wise to it. Here’s what I wrote about the changing attitudes of some state lawmakers when I covered those charges brought against those 14 people earlier in March:
Last year, Utah signed into law a new data-sharing arrangement between Utah and Montana “to locate and assess tens of thousands of Utah tax evaders, with a particular focus on the owners of cars and boats registered in Montana,” according to Bloomberg. Back in July, California’s tax agency identified over 1,500 vehicles that had potentially been improperly registered to Montana to avoid registration fees.
[…]
According to Bloomberg, supporters of the bill in that state say the data-sharing arrangement could yield up to $100 million in recovered taxes and penalties. That suggests officials are prepared to hand out more than just slaps on wrists.
The steps follow states like Iowa, Illinois, and Massachusetts, which, over the past decade, have cracked down on out-of-state registrations by residents using Montana LLCs. Most recently, Tennessee has very publicly cracked down on YouTuber Cody “WhistlinDiesel” Detwiler’s Montana registrations, arresting him twice.
California, with its higher taxes and extra-tight emissions regulations, remains the highest-profile State in this situation. And it shows no sign of backing down. As I mentioned above, the California Department of Tax and Fee Administration (CDTFA) has already identified over 1,500 vehicles that may have been improperly registered in Montana for tax avoidance purposes.
Zeroing In
Now, the state is going one step further. In order to hold California residents accountable for paying the appropriate taxes on their vehicles, the state is attempting to change the law so that even if a person registers a vehicle out of state using a shell company—a.k.a., an LLC—the CDTFA can still tax them accordingly. The bill, SB 1406, is being introduced into the California legislature by state senator Jerry McNerney. From the release:
SB 1406 would close the Montana Loophole by expanding California’s definition of who is a resident under state use tax law to include a shell company when at least one member of the business is a California resident. SB 1406 would also authorize CDTFA to impose tax liability on the individual members of a shell company.
But what if there’s a legit reason behind a California resident registering a car with an out-of-state LLC? There are plenty of perfectly acceptable motives, such as if someone has a second home out of state. Well, the bill considers that, outlining a list of potential ways to spot a real business entity from a shell corporation used to finesse the tax system:
In addition, SB 1406 would add the following criteria as evidence that a business is a shell company, and thus potentially involved in an illegal tax evasion scheme regarding out-of-state vehicle purchases:
- Lacks a specific business activity or purpose,
- Fails to maintain a physical location outside California,
- Fails to employ people and provide those persons with W-2 wage and tax statements, and
- Fails to file federal tax returns or fails to file a required state tax return in a state other than California.
McNerney’s office says that the CDTFA has identified at least 2,500 vehicle sales as possibly involved as of 2023, which is a stark increase from the agency’s estimates just a few weeks ago. They also say the loophole costs California taxpayers roughly $20 million in lost revenue, “funds that could have been used to pay for road repairs and other essential programs,” according to McNerney’s press release.
If you’re a frequent reader of The Autopian, you probably know that we have a couple of cars registered in Montana. That happened before I started working here, so I’ll let our publisher Matt Hardigree explain:
We did it for a couple of reasons. The first was educational. What’s the process like, et cetera. Once the Murano is sold I’ll write about it. The second was convenience, as the vehicles were going to be spread around the country and not based in any particular place. We didn’t actually end up saving any significant amount of money by doing so. If anything, we may have paid slightly more given how cheap it is to register a car in North Carolina.
McNerney’s office says SB 1406 is expected to be heard in a Senate committee in the coming weeks. If it makes it through the first stages, it’ll eventually get a House vote, then go to the Governor to be signed into law. My advice to those with Montana registrations in California hasn’t changed since the last time I wrote about this: If you can, just register your car in your home state. Sure, it might be more expensive up front, but in the long run, it’ll likely be the cheaper option, especially if you have to start paying lawyers.
Top graphic images: DepositPhotos.com; ABC/Disney
When I first started being able to afford an exotic, I went with the MT LLC because it was so common and obvious that that’s just what everyone does. Eventually I ended up actually buying a property in Montana and then it made sense to keep my cars registered in that state. But I live in New York, I go to Mt every year for some RnR but I don’t live there so I “sold” the cars back to myself in my state and paid the tax.
Honestly, having a Mt plate on my cars was always kind of fun because they have some cool designs to choose from and NY has some pretty laughably boring ones. But I got sick of people always mentioning it at meets and stuff, and weirder were MAGAs that’d hail my down on the road and applaud me for saving the tax.
But I don’t want it to go away! It is the single most useful thing to have older cars that have weird emissions and the yearly nys inspection is just silly for those things.
Love the top shot!
Hat tip to ya
“I’m just a bill”
Yes I’m only a bill
Pretty sure that’s a Lambill, dude
Wow, $20 million whole dollars in lost tax revenue. What if we just taxed the billionaires for all their hoarded wealth instead?
Or both…
Yeah I am ok with both.
To be fair, this bill attempts to do that.
It’s the rich twats who are using the Montana subterfuge in the first place. Anything to ef the system to their financial advantage. Grrr
I mean, this is a direct example of taxing hoarded wealth. If you can afford the supercar, you can afford the taxes on it.
It’s a good start.
While I agree our tax system is broken, the California proposal to tax billionaires will just incent the billionaires to move out of state (or their assets, anyway).
So what? There is no other option. Placating them does nothing. They will not do the right thing. I am honestly tired of the stupid excuse that billionaires will just leave if we tax them. I say good fucking riddance.
Erasing the rich folks’ ability to “Buy, Borrow, Die” and then pass on their assets to their heirs would be a start. Until we do, they can just live off their assets, pay minimal taxes (since nothing is “sold”), and then pass on their assets to their heirs which then get an updated market value, tax-free of course.
This is a problem.
I agree but that doesn’t mean that my previous comment is wrong.
Billionaires and wealth-hoarders are some of the major reasons that California is so unaffordable
Good.
And Kalispell, from what I can tell by the plates, has a lot of those LLC’s. Billings has a few and Great Falls as well. Just shut them all down, if you can find the owners of these LLCs. If my state really needs these funds, just tax the shit out of alcohol. Fuck, not too long ago someone was on their 12th DUI.
Sorry, but I see it as a legal loophole that people are able to take advantage of. No different than any other, and any of the things by themselves is legal – having a LLC in Montana, having the LLC register a car there, and driving it in another state. To make things truly legal, one simply needs to have the vehicle visit Montana once a year – easy for folks close to the border. The problem is that vehicles are tied to states, and there is a lack of controls between states.
Yes, it’s a loophole. And now they’re closing it.
Now if only Maryland would get this serious about MD residents registering their cars in VA.
It may be happening finally: https://www.cbsnews.com/baltimore/news/maryland-lawmakers-virginia-registered-license/
True that. I do think the MVA is making some headway on the Virginia tag.
Isn’t tax fraud already illegal?
This is a somewhat new way for the rich to cheat.
This isn’t technically fraud, it’s avoision. That’s why they need a new law to stop it
One small correction – if the bill passes the State Senate it will go to the Assembly. Our state legislature doesn’t have a “House”.
I’m curious on the numbers involved here.
Can anyone tally the $$ difference between Calif and Montana on something like a new 125 grand Escalade?
Well it’s 100% of what California charges in sales tax because Montana does not charge any.
Per the interwebs the base sales tax in CA is %7.25 but individual districts may also assign a sales tax, so roughly $9,000 plus any extra local taxes. Sounds like an absolute joy to figure out…
(If that is badly off it’s because I am not great at math)
No sympathy for people dodging taxes on exotics. Sympathy for regular folk that just want to drive a kei truck occasionally.
My neighbor uses a Montana kei truck as a neighborhood runabout/Costco hauler. I feel like the cost of enforcing taxes/registration on that would cost the state more than they would take in.
Yeah, some of this is also people registering non-US market vintage cars that would be difficult or impossible to get plated in California
Yeah that doesn’t bother me, and needs an easier route to legality really. But the rich jerks ruin things for everyone as usual.
Apportioned registration/IRP?
Also, they need to make it clear that they will not get a refund from Montana, nor will they get credit for any money they paid Montana.
I wish Montana would’ve closed their loophole instead of Vermont.
Another way to push people with money out of California. 1500 cars and Cali lost out on 20 million in taxes? That’s over $13K. We’re charged sales tax on private sales of used cars. If a state needs to do this, maybe their registration and taxes are too high
Always found paying sales tax on a used vehicle ridiculous for a normal joe blow. Like the car has been registered its whole life so plate and registration fees, plus tax on the fuel, the insurance and depending on your state (like me in Indiana) we pay a yearly excise tax that is based on the original value of the vehicle and the age so the newer the car the bigger the yearly tax. Yay force people to want to drive rusted out hoopties.
You don’t have to threaten me with a good time. You’re acting like having the tax cheats and fraudsters leave is a bad thing.
Also, why should rich people get to dodge taxes? Surely they can afford it…if there are people who pay too much taxes, it’s the middle class, and they can’t do anything about it.
Good riddance. Perhaps Montana will welcome their tax cheating asses but I doubt it.
I’m sure those wealthy folks would trade oceans views and cutting edge civilization for the backwoods of non populated Montana. Just like the twits moving to the hellhole formally known as Texas. And the New York city saying they too are leaving. I heard about an island in the Caribbean where the T-E elite could all go live together. I’ll foot the bill to send them a case of poupon mustard
It is the official policy of the party in power in Montana.
Exactly where do you think they’re going to go? They always threaten to leave, but rarely ever do. They have the perfect life in California. Point of interest. Many first world economies are discussing a universal tax code of sorts, to keep such tax dodgers from finding anywhere on the planet to hide.
Lol yes, I’m sure the rich are going to flee the natural beauty, economy, culture, and cuisine of coastal California to avoid paying $13K more in taxes. They’ll happily eat Applebee’s in Billings and never go to the theater again!
Every state should be doing this to stop tax cheats.
I love the holier than now it costs California tax payers billions and the money could be put to good use. It doesn’t cost the other tax payers a cent and if the state of California would stop gouging citizens with exorbitant taxes and quit wasting hundreds of billions on make a wish programs there would already be plenty of money for good helpful programs
Did Fox tell you to think and say this?
Nope secret society that taught me the dark secrets of math.
Lol I’m sorry– wasting hundreds of billions on Make A Wish?
In case I didn’t make it clear I was not dissing Make a Wish I was using it for the I want a hyper train to go in the south of the state. I want to cancel use of oil tomorrow. I want to force everyone to buy EVS. These groups just having pie in the sky desires and using California and everyone else tax money to try and make it happen
Good. Tax cheats. Contribute to society.
If they were really serious about this, they’d offer rewards for reporting violators. And probably an unpopular opinion, but if your car can’t pass CA smog, maybe you shouldn’t be able to daily drive it on public roads? I appreciate the air being cleaner than 50 years ago.
Some states do. I think California actually does offer rewards for this. I know Maine does.
I’ve done it for free!
“if your car can’t pass CA smog, maybe you shouldn’t be able to daily drive”
CA emission tests keep changing their standards to the point that some cars have to be cleaner than when they were new to pass. Plus I’ve heard that in CA, its getting very difficult to find somewhere that has the ability to test a pre-OBD II car.
I get it; I live in California and own an 1980s Jeep CJ, but that’s not quite how it works.
Cars need to meet the emissions standards corresponding to the year of production of the car. The exception is if you swap in a newer motor (and all the related emissions equipment including the cat), then you have to meet the requirements of the (newer) year of donor engine. Anything 1996 or newer triggers OBD-II. As far as finding a smog station that can test older cars, that’s just the passage of time. With fewer and fewer older cars on the road, you can’t blame the smog check stations for shifting to serving newer cars.
The good news is that an updated version of Leno’s Law is being proposed in Sacramento. “Leno’s Law 2.0” allows for cars being fully exempt from California smog checks once they reach 35 model years old. The exemption rolls forward one model year every year and replaces the currently frozen 1975-and-older cutoff. If it goes through starting in 2027, 1991 and older cars will be eligible for no smog test. By 2032, vehicles up through 1996 would become eligible.
Like Leno’s Law 1.0, this is solely for classic cars that are registered, stored, and insured as such. This causes gnashing of teeth by those who want their clapped out car from the Malaise Era to be a daily driver. You still will have to smog those. And for those who yell “but I only drive my daily driver a few miles each year, Google “pollution from cold starts of cars from the 1980s versus mileage.”
I may add that the original standard for those cars was just for the sniff test. However, since 1997, I believe, they added the dyno test, which these cars were never designed to take. I also believe that the current limits are lower than they were when these cars were new.
Unfortunately the have convinced the massed that by “helping classic car owners” register their cars, they are helping rich assholes to avoid passing emissions. For proof, read this thread. While many rich assholes use the Montana loophole to skip on taxes. Kei and classic car owner are the ones getting screwed. Said rich guys may just move their cars to their 2nd or 3rd houses outside CA. The rest of us just eat $hit.
We can hope for Leno Law 30.0 but I doubt this common sense law will ever get passed here in CA.
Most of those cars that cannot pass emissions are classic cars. Hardly anybody is 80’s cars as daily here in CA.
It’s just a bill.
“Yes, my car’s worth 10 mil.”
And people gonna die on that hill.
Well, it’s a long, long schlep, see
And the states? Gettin’ tax-y
It’s a long, long wait
While they decide my car’s fate…
Hell yea. My tiny county is under investigation because they audited the local car registrationagent and like 10/12 transactions they looked at had glaring errors where they aren’t charging as much as they should be. There is money to be had in the existing tax base without increasing taxes if it is audited and enforced.
Everybody knows tax avoision is a crime equal to fraud.
Look it up!
Good. Make the wealthy pay their fair share of taxes. If they can afford to buy those exotic cars, then they can afford to pay the taxes.
What about people who are registering old obscure cars that this site seems to love so much? It’s not just affecting people with exotics. I couldn’t even get my FD RX-7 to pass CA smog completely stock with a fresh cat. If they passed Leno’s law I’d be fine with this.
I personally don’t care if you’re doing it to get an old car around smog or something, but if you’re a millionaire doing it to get out of taxes I have no empathy.
Sounds like you’re gonna have to park your FD RX7 and drive something newer until Lenos law gets passed.
I suggest a 2nd gen or newer Prius.
I love old cars as well. But as someone who has asthma, I also love clean air and consider it a higher priority.
This is a “pick your battles” situation. An occasionally driven RX-7 is a drop in the ocean compared to commercial trucks/vessels and industrial polluters.
An occasionally driven RX-7 is also far cleaner than a daily driven Prius that you suggest as an alternative. Enthusiast weekend cars just aren’t a meaningful source of pollution at scale, because they typically aren’t driven as much.
Let’s focus laws where we can have the most impact. Leno’s law was a very reasonable compromise in this regard.
I guaranty week as a whole, gas-powered weed wackers and leaf blowers pollute much more that all classic cars combined.
Which is why restrictions are being placed on those as well.
I especially hate gas powered leaf blowers.
And I got rid of my gas lawn mower a long time ago. Have been using electric for mowing and trimming for well over a decade.
This issue is about the rich wanting to avoid taxes.
But other people are getting caught up in it.
Paying taxes?
It’s an epidemic!
The registration for most of the cars Space is talking about are really negligible vs. the exotics skipping taxes. Most of the people getting screwed are willing to pay the registration PLUS an emission abatement fee (usually higher than the registration) to be able to enjoy our cars once in a while.
This is a tax issue with rich people dodging paying their fair share. Dont go off topic.
It makes sense to me, but this is about pitchforks and torches, and not about common sense.
I hear this all the time. Pay your fair share. Since the top 10% pay 50% of the taxes how do you figure their fair share should be more. And since the bottom 50% pay zero how is it their share should be less than zero?
Sales tax is a consumption cost. Consumer a million dollar toy. Pay million dollar value sales tax. As a percentage of income those lower 50% encounter a much higher burden. And so what if the uber wealthy pay a lot of taxes? Hell the happiest countries in the planet pay some of the heftiest taxes. There is no gotcha in you comment, taxes are what pays for civilization.
Taxes are the price we pay for civilization, however, some people want it at no cost.
FDR
“ And since the bottom 50% pay zero”
That’s false. With all the various taxes in place, there is no way anyone pays zero taxes.. either directly or indirectly (like tariffs).
Everyone (even so called “illegals”) pay sales tax (in most places).
A sales tax in proportion to income is WAY higher for a poor person.
And poor people spend ALL their money on survival (food, etc.) compared to the wealthy.
This is why the rich should pay taxes on their wealth
The rich benefit greatly from society/civilization. They should pay for it
I hate when states put sales tax in food, mine doesn’t. Basic necessities shouldn’t be taxed to help the lowest income.
My god, dude. First of all, your stats are wrong. Even if you’re only referring to income taxes, your stats are wrong.
Second of all, the top 10% in the US hold about 70% of the wealth. Which even by your incorrect complaint, would mean they aren’t paying their fair share of taxes.
Try harder. This is … just lame.
“Fair” is a church parking lot filled with carnival games and pigs for sale.
You’re not making a logical argument, you’re appealing to emotion and using “they owe more because they have more” as a rationale for it.
If anyone needs to try harder to support their arguments, it’s you.
Some in the bottom 50% pay negative taxes, if you have kids you will get a check at tax time for the child tax credit even if you withheld no income.
could they sell the car to a spouse for $1 and re-register in CA to still avoid paying taxes. In CA do you pay tax on the sale price?
This probably wouldn’t hold up in court because it’s a sham, though I am not familiar with CA laws. When I moved to Maryland they made me pay sales tax on the book value of my cars unless I could prove that the taxes had been paid somewhere else.
Texas had something similar. If the transaction price of a vehicle was too low, you were taxed based off book value. I got a non-op motorcycle when I was living there and had to go through an inspection type thing where I presented the vehicle to an inspector, made the case for why the value was so low, why I shouldn’t be taxed at book value, and fill in some extra paperwork. The guy clearly understood when he saw the turd of a bike and signed off on it, but it was a process.
I can only hope most states charge you the book value, regardless of what you actually paid.
In CA they ask you to state what you sold it for. I’ve never had them question it. It could have damage. They don’t know
Probably soon, you’ll either pay based on book or have to go through someone to verify it. The state is good at figuring out how to get their money for taxpayers but bad at running the state
I think my state used to go by what it sold for, but that method is fraught with abuse. $8k car, the seller and buyer agree to stating the sale price is $4k with the rest in cash – the seller is fine doing that because it doesn’t cost them anything, and the buyer is thrilled because he saves in taxes. It’s one thing if regular folks shave a couple of grand off the price of a car. That’s not going to affect the taxed collected a huge amount. But when the rich start doing that on expensive cars, then the abuse becomes a big deal.
My state bases the taxes on either sales price, or estimated value, whichever is higher. So if you buy a $10K car from Grandma for $1 you’ll still owe whatever the state sees as book value for the car, but if you pay $25K for the same car you’ll be taxed on that price. It’s one of the more reasonable ways of handling this IMO.
Most people that sell cars person to person lie about the sales value. I don’t think you could do $1.
I have had the agent at the CA DMV run a query through a sales database to verify if the purchase price on my 997 is in line with the market. So they do check to some extent.
In my experience, you can get away with claiming a much lower value (this is very common), but not something egregiously out of line.
For a state that is supposedly still the heart of automotive culture they sure seem to do everything they can to kill it.
Taxes owed in accordance with the law are taxes owed, purposefully going out and trying to avoid them is fraud.
Yes but gouging tax payers to line politicians pockets isn’t exactly what I call lawful.
How is it gouging to say that the person buying a $200,000 car should pay the sales tax on $200,000?
Taxes owed are taxes owed. What gouging?
Tax fraud is not car culture.
Good! This practice is tax fraud, pure and simple. And I even (mostly) call bullshit on the loophole of people who have second homes, if the CAR is mostly being used in California, and the owner is a California resident, if the state is losing out on substantial tax revenue as a result.
To me the ONLY loophole there should be if the car attracts MORE taxes in the state in which it is registered so there is no tax reason to not do it. So no free ride because of your ski house in Big Sky. Which is why I didn’t feel guilty about keeping one of my BMWs registered at my place in Maine for five years, even though it spent most of that time in Florida (it spent a few summers in Maine, including the summer after I bought it in Wichita – drove it to Maine, then Florida in the fall). It cost me real money to do that, but it meant the car kept it’s 15yr/150K SULEV Emissions warranty on a whole slew of expensive bits. Which of course, didn’t break because I spent all that money to keep the warranty valid by keeping it registered in a CA Emissions state.
I’d LOVE to register my three cars that I keep in Maine in Florida, it would save me about $600/yr in excise tax. But Maine is serious as a heart attack about this practice because of that. Florida pretty much could not care less about the piddly $40/yr they lost out on, and got most of it back with the $200 first plate fee when I did register the car there anyway. Technically you only have 10 days to register a car brought into the state, but being a snowbird gives you plausible deniability.
The fact that they are cracking down on out of state plates but refusing to pass the Leno law is silly. I am not about rich dudes skipping taxes, but I feel for the folks who have older cars that wouldn’t pass SMOG or interesting cars (imported 25 year old cars that are federally legal but not CA legal). Yet another way that CA seems to be making life harder on folks while chasing the rich out of their state.
Yeah I’d happily pay doubled registration fees in CA if I didn’t have to smog the car. If I were to use the Montana LLC route to register a car, it’s not to save money.
Having been to LA in the “bad old days” of even the mid ’90s, I fully get why they are how they are about emissions, even on what are now pretty damned old cars. There are still a TON of those older cars on the road due to the mild climate. It was BAD even in the ’90s, I can’t even imagine how bad it was in the ’60s and ’70s. Paying more money doesn’t help keep the air clean.
But that said, I don’t think it is entirely fair that the WHOLE state should be subject to that harsh regime that is really only necessary in parts of the state, and I certainly don’t think the emissions exemption should be a single fixed year. . If you don’t live in the inversion bowl areas, the rules should be more relaxed. And I don’t agree with holding cars to harsher standards than applied when new, which is somewhat my understanding of how it is at this point. Please correct me if my understanding of that is wrong.
FWIU it’s not harsher standards it’s that it’s more difficult to get a ’75-94 car smogged than before with fewer shops doing it because the sniffer equipment’s gone obsolete so when it breaks or the last guy who knew what the EGR pump on an early ’80s FWD Chevy with “Computer Command Control” carb is supposed to look like retires, they don’t hit eBay for parts or train a new guy, they hang out an “OBDII Only” sign.
Then don’t allow shops to do that. If you want to be able to test anything and make that sweet revenue stream, you have to be able to test everything. That’s an administrative issue.
Also, HOW you meet the standards shouldn’t matter. If what is coming out the tailpipe is what the law required at the time, you pass. The visual inspection stuff is BS. If I want to add aftermarket injection and a cat and have my ’80 whatever be multiple times cleaner than when it was running a carb and air injection or whatever, should be all good.
If I was King of the World, things would be different. In the meantime, you couldn’t pay me enough to live in California for many, many reasons, including this one.
I don’t see much from before 2001 these days here, and it’s a self-reinforcing problem as smog shops aren’t fixing their tailpipe sniffers.
Also why emissions exemption should be some reasonable number of years rolling. 20 or 25 seems reasonable.
If they were all about clean air the law for emissions is enough. Why they need all the taxes and fees when they are already have a GNP larger than most countries it’s about graft and corruption.
It’s really not. Is there some level of graft and corruption sure, that’s the real world at work, but it’s rounding error. It’s about providing public services. Of course, if you think those services are being provided to people you think shouldn’t get them, that’s another different question. California is vast, sprawling, huge population with a huge number of services to be provided. And to a large extent, they shot themselves in the foot by capping property tax increases, which limits one of the two main sources of revenue for state and local governments. The money has to come from somewhere, and cars are an obvious target for all sorts of good and bad reasons.
It does vary across the state.
In the populated areas, you have to smog your car every two years. In the rural areas, it’s only when you sell the car (and the responsibility falls to the seller to smog it).
While I agree about Leno’s law – the rich can damned well afford to pay their damned taxes. I doubt very many people are registering 20yo cars simply to get around smog this way, but a whole lot of exotic car and expensive RV owners do it simply to avoid many thousands in taxes. The sales tax alone on a $1M hypercar could be over $100K in many places in CA, plus another $4-5K annually to register it. To which I say, “boo-hoo”. Pay the damned state if you want that toy.
You’re absolutely right. If you can afford a supercar, you can afford to pay the taxes on it. If you can’t afford the taxes, you can’t afford the car.
There are a lot of people I am aware of registering old cars to get around smog, because even stock, a lot of cars don’t pass, finding someone to smog a pre-1995 is a pain, your car gets flagged, etc. It’s a clusterfuck.
Not a smog issue. A rich people not paying taxes issue.
How about every car pays the same amount every year,? That sounds fair average the total amount and divide it by the number of cars registered. Why should an expensive car mostly sitting in a garage pay more than a person driving a Prius every day? The Prius would actually be contributing more pollution.
I feel like if you are going to tax cars as owned objects, then the correct way to do it is based on *current* book value. Just like how houses are taxed (theoretically) on current value. Whether to tax cars annually at all is a different question.
Car usage should be taxed by miles covered annually, regardless of what is consumed to make them go. BS privacy concerns be damned.
It’s not silly, it’s the difference between career civil servants putting a new enforcement focus on laws already on the books and the legislature passing a new law.
What about showing where passing the visual inspection with discontinued stock parts would be a hardship? Like the part is discontinued and impossible to find. Show a dealer listing the part is discontinued, show a NAPA search with no parts and a web search showing no parts. Then a passing for the model year smog result with documented modern bits. That would mean more work but would mean keeping good condition cool old cars legal and able to be enjoyed.
My guess is that the focus will not be on “normal” cars because there’s no money in that. They are after the taxes, so they will probably focus enforcement efforts on expensive cars.
Two issues at hand here.
You are mixing up tax policy, of which this article is about, with emissions policy, what this article is not about.
I see them as interchangeable.
Why do people run MT (or AZ or OR) plates in CA?
1) They have found a loophole to avoid paying sales tax
2) They can’t pass SMOG
Either reason will take CA tax revenue away from the state. I know that the article and the rules will focus on the first reason, but technically the second reason will also be breaking said rules. I’d be much more supportive of said legislation if they could protect the folks with classics/clunkers but they refuse to do so.