Hartford’s property tax structure is a tangled mess that makes it very expensive to own and register a car in the city. The majority of residents drive to get around this state so Hartford’s car tax is across the board punishing.
If the city was trying to promote public transit I could see the purpose of this regressive tax. Hartford’s car tax, however, is not part of a comprehensive transportation policy; instead it only encourages city residents to register their vehicles in more tax friendly municipalities.
Or, in some cases, it makes car ownership much more difficult for the city’s poorest residents.
In Hartford, every car or truck owner feels the weight of a 74.29 mill rate taxing 70 percent of their car’s fair market value. A resident with say, a $15,000 car, for example, would see an annual tax bill of about $780.
But when it comes to setting the city’s budget and mill rate, attention to the car tax is very much an after thought, as real estate taxes generate 10 times the revenue. In the end, application of the mill rate to the car tax achieves little besides adding to an already high cost of living.
Most other Connecticut municipalities don’t carry Hartford’s heavy car tax burden. Residents in Windsor, Wethersfield and East Hartford, for example, pay about half the car taxes Hartford residents pay.
Much of Hartford’s car tax problem stems from a unique multi- tiered property tax system that assesses commercial property at a higher rate than residential property. The system needs to be changed because while it subsidizes homeowners, it strangles economic development, and often hammers small business.
Recent legislation passed by the General Assembly did establish a gradual rebalancing of the tax rates, pushing more of the tax burden on residential homeowners and away from businesses. It does not go nearly far enough to solve the problem; but chances of further reform aren’t likely.
While the debate over the city’s property tax system largely focuses on commercial and residential real estate, the impact on motor vehicles is significant and also resolvable.
There is one possible solution that may make sense for Hartford. Last year Gov. Dannel P. Malloy suggested exempting from property taxes every motor vehicle valued under $28,000. This would provide a cost savings to the poor, and lift the property tax burden from many Hartford residents.
Malloy’s proposal, however, failed to gain support because many municipal leaders lined up against the measure. His proposal would have cost cities and towns roughly $500 million in tax revenue.
A better solution could be a statewide mill rate, one that progressively taxes less of a cars fair market value as it gets older. In Massachusetts, for example, the statewide mill rate has been set at 25 for decades, and under that approach within five years of buying a new car you’re only taxed on 10 percent of its value. Phasing in such a policy reduces the tax burden on older cars and maintains the equity of a broad based tax structure — one that does not favor one group over another.
Personally, I would prefer a comprehensive transportation policy for Hartford that would: make car ownership costly; promote the use of public transit; end the 100 percent subsidy on city employee parking; and sell off the city’s downtown employee parking lots for development.
Regardless, the city and state should join together to reform the motor vehicle tax. While the Governor sees it as a statewide problem, Hartford knows locally that it’s unfair and regressive.
A collaborative solution can put money back in the pockets of those who need it most in the city.
David Panagore is the former chief operating officer of the city of Hartford. He will be writing an occasional column for the Hartford Business Journal.
