In yet another hit to Illinois’ working middle income taxpayers, a little talked about provision of the State’s Capital Construction Funding legislation passed on the final days of Spring Session included a provision that will cap the tax credit for a motor-vehicle trade-in at $10,000, beginning January 1, 2020.
Current law provides a tax credit equal to the full value of any property that is traded-in to a retailer selling property “of like kind and character”. Under this change in the law, a customer who trades in a vehicle at over $10,000 will not receive the tax credit for the portion in excess of $10,000.
The current trade-in credit ensures that a consumer only pays tax on the portion of the vehicle they utilized. Removing this credit, as was done by the legislature this Spring, ensures a consumer pays tax when he or she purchases the vehicle and again when they sell it. This double taxation increases the costs for purchase of both new and used vehicles, which will have negative effects on our individual and collective economies. I voted NO on this tax increase and here’s why:
Not only is double taxation of already overburdened taxpayers wrong, this new tax will interrupt the free market in many negative ways. More consumers will delay vehicle purchases, especially with the increased licensing fees that will also be imposed in 2020. Many auto-dealers argue increased vehicle costs will likely lead to fewer jobs, a reduction in sales tax generated and sent to the State and slower growth in the industry.
Governor Pritzker and his Democrat Supermajority are fond of saying their revenue-extraction policies are only aimed at the pocketbooks of super-wealthy Illinoisans. However, the super-poor need to get to their jobs just the same as the super-wealthy. Increasing licensing fees, fees on trailers (including work trailers), increased gas taxes, and, now, double-taxation of vehicle purchases all hit the pocketbooks of the working poor and middle-income families harder than they do the wealthy. Especially in rural areas of the State, like Northwest Illinois.
At some point, the shine wears off the apple. Those who say on their glossy propaganda that they stand up for the working poor and middle-income would be wise to quit thinking about how they plan to respond to what they say and, rather, actively listen to what ALL Illinoisans are screaming. They cannot afford all these tax and fee increases. Give them a break! Give us all a break!
To that end, I have co-sponsored House Bill 3890 and House Bill 3891 to fully repeal this change in law and restore the tax credit as it was prior to this change. We have time and the ability to pass this before the end of the Fall Veto Session. I urge my colleagues who purport to stand up for the working poor and middle-income to join me in doing so.