High-End Car Owners in Massachusetts Escaped Massive Taxes

Maserati_granturismo1

Some people get all the luck.

Thanks to a foul-up by the Massachusetts Registry of Motor Vehicles, owners of some 131,000 ultra-luxury cars, such as Lamborghinis and Maseratis, escaped or paid only a fraction of the auto excise tax they owed the state.

How did this happen? From the late 1990s to 2007, the RMV calculated the vehicle tax bills with a database from the National Auto Dealers Association. The problem is—and boy, this is a hoot—NADA excludes high-end luxury cars.

Therefore, someone who bought a $1.5 million vehicle in Boston during that period likely paid less in excise taxes than someone who purchased a Honda Civic. In the worst-case scenarios, RMV workers guesstimated ultra-luxury car values at $17,000. In the case of a $325,000 Maserati, the tax would amount to $383 rather than the correct $7,313.

The real losers are the cities and towns of Massachusetts, which overall lost $32 million per year—money they won’t recoup because the state has found it to be too costly, laborious and possibly illegal to charge luxury car owners for the back taxes.

The question is: How many other states use the NADA database? And for those that do, how many have mechanisms for tallying ultra-luxury vehicles?

Luxury Car Levy Too Taxing for State (The Boston Herald)

By Stephen Markley | July 11, 2008 | Comments (14)
Tags: In The News

Comments 

hitman1970

Good to see those Massachusetts Democrats looking out for the little guy again.

Happymantis

How is a clerical mistake at the Massachusetts DMV a political problem?

GR

Hey Hitman, Although there may be some Democrats employed by DMV in Massachusetts, it's not a political office.

Infosaur

What about sales taxes on privately traded luxury cars? Say something bought at Barrett-Jackson?

The funny thing is, we used to have a "luxury tax" on cars over $30k. (back when THAT was high, and it excluded SUV's, which is part of the reason they became popular)

Any yet when the car costs MORE than a HOUSE? No data, assumed to be $17k.

Wow.

George

First off I'm a proud Democrat but to insinuate that the MASS DMW is not run by Dems is hilarious. I used to manage the Hadley location and can attest first hand that the entire DMV is run by our party. It's not politicized because the Cons have no footprint within the DMV.
Ironically it was a Dem State Rep (who will go unnamed as he was a good person) who single handily prevented us from updating our technology which would have included a new tax basis program. This would have never happened if it weren't for that.

dave

Outrageous! No wonder 80000 people a year are leaving this state. The excise tax is the BIGGEST RIPOFF of alltime. How many out there remember when the tax was $66 dollars per thousand valuation instead of the current $25?

LM

I think the excise tax is a great thing as cities and towns are always short on cash, though how they calculate it (using some very low NADA values) is a bit nefarious. For instance, my 04 RAV4 was valued at something like $4000 as my tax bill was only $125! The real value is something like 3 or 4 times that amount. Not that I want a higher bill, but I think everyone's bill should be higher.

And to Dave...our sales tax is very low compared to most states that have a sales tax. SO, the extra 2.5% (especially the first year) is not that bad considering this. Secondly, other states charge you much more, per year, to register your car, than they do in MA. $41 to renew is pretty cheap.

As far as exotics - I wonder just how much the state is losing and how many exotics are actually purchased here. I don't really ever see them around, maybe because the weather and our roads suck.

LM,
You're right!
You will probably leave some suspension parts on the road if you drive your exotic car in Boston.

DL

when the weather is good, i can see several Continental GT's and 1 or 2 Ferrari's, all no older than a couple of years, cruising around.

about the crappy roads -- somehow i saw one maneuver Chestnut Hill ave the other day ...

funny the pic of the Gran Turismo is there -- i saw my first about 3 weeks ago while jogging. i see exotics regularly on Newberry street, in Brookline/Newton areas when the weather is good. i imagine Weston has even more.

DL

that second line didn't come out right ... meant saw an F430 maneuvering

LM

Not saying I haven't seen any...but it is rare. Much rarer than in, say, South Florida.

Funny - I did see a guy washing his orange Lamborghini (or its owners') at the ratty Lechmere Car Wash on Route 28 in Cambridge last weekend.

DL

hahaha, comparing Boston to South Florida? we're talking about a town where many people/families don't even own cars! LM's funny.

i think that, in addition to crappy roads, Boston area also has the deterrent of making you park on narrow streets (at least once in a while, often every day) and risking some jerk swiping off your sideview mirror or putting a dent in your fender and driving off.

But being a big financial area, there are plenty of filthy-rich people risking their Murcielagos' suspension pieces around here. at least as much as a similarly cold metro such as Chicago. so this stupid tax thing means a lot of dough

DL

maybe if they fix the tax hole, there'll be more money to fix a few of these giant potholes; then more people would want to buy exotics and drive around with less fear of ripping off their oil pan; which means more taxes; which leads to better roads; which leads to more exotics ... yeah right. the average person always gets screwed anyway

All posts have something to learn. Your work is very good and i appreciate you and hopping for some more informative posts.
Thank you…….. Great blog.

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