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Why do people pay taxes more than once for the same car to the same dealer?
When dealer sells a car or lease a car to somebody, the buyer pays sales tax. After 24 or 36 months that person brings the car back and takes another car. Another buyer comes to the dealership and wants to buy a car that just came from lease. Why the second owner has to pay sales tax if the first buyer already paid? I'm confused why this works the way it is. I think we shouldn't pay taxes more than once for the same car. Please explain.
OK, the government already got their money once - I get it.
I don't get why should people pay sales tax every other time they buy the same car over and over?
The sales tax already been paid for that car. I understand it's a law and regulations, but I'm concerned about logical part of the whole thing besides the concept of "government needs more money".
How about this:
John bought a car in 2000 for $35,000 and paid sales tax on the whole amount
in 2005 he took the car as a trade-in to the dealer
the dealer sold the car in 2005 to Steven for $16,000 and Steven paid sales tax again
Two years later Steven changed the car
in 2007 Mike bought it and also paid sales tax on the amount of $8,000
and so on... This is how it works?
2 Answers
- SPIFIMAN1Lv 78 years agoFavourite answer
Taxes are paid when people register their vehicle with their local D.M.V. it has nothing what so ever to do with the vehicle being taxed before it has to do with the new owner paying their fair tax.
Source(s): Finance Manager for a car dealer for over 12-years. - Anonymous8 years ago
A person who leases only pays tax on the portion of the lease. If they want to later buy the car they must pay the sales tax to buy it.
For example, if the cost to lease is $12,000 you pay tax on $12,000 upfront. Later if the price to buy is $10,000 then the tax on $10k is paid.
Its not paid twice.
And if you trade a car you already own, you get a credit toward the tax on the new car for the value of your trade.
