As someone who isn't made of money nor does the living situation allow me to fit more than one car at a time, in order for me to sample around the varying types of automobiles out in the world, I've got to keep swapping them out i.e. sell and replace. Listen, no need to lecture me on depreciation curves because I simply take that as the cost of doing business when it comes to this car enthusiast hobby.
There is however one rub I do have a problem with: sales tax. It's the one expenditure I cannot recover when I sell a car, on top of which I have to pay taxes on the new car as well. Living in a high-tax county like San Francisco exacerbates the pain. Combining the last two cars I bought, I've paid over 7,000 dollars in taxes. While most people lumps taxes into the sale price of the car and treat it as a singular sum (less pain that way, I guess), I consider taxes separate because it doesn't pay for anything innate to the car.
I'm somewhat due car change now that I'm homing in on three years of owning the MX-5. However the thought of having to outlay yet another significant chunk towards taxes in purchasing the next car is giving me more pause that it would five years ago. I guess it's true that we turn Republican as we gradually grow older and attain more assets: we'd like the government to take less of our hard-earned stuff.
In some States buyers can deduct the price of the trade-in in calculating the new car's tax. Tax-heavy California obviously isn't so bold to have such a program. The State's got tons of incentives for electric vehicles though sadly normal combustion-engined cars don't deserve such special treatment.
I can't be the only person that wants to switch cars but the prospective tax bill is stopping the fun. Why doesn't automobile dealership associations lobby California for some sort of exemption? I for one would buy cars more often - brand new at that - if the tax burden wasn't so heavy. At the very least we should be able to deduct the sale price of the trade-in like other States.
Some people no doubt would ask "why don't you lease?" because in doing so I'd only be paying taxes on the portion of the payments over the specific loan period. While true in theory, lease deals are horrendous on anything that isn't a basic German luxury car (BMW 3 Series) or mass-market grocery getter (Toyota Camry). The cars I'm into it makes better financial sense to purchase outright.
Besides, spending time to research the appropriate leasing terms and performing calculations isn't exactly my idea of a good afternoon. I'd rather negotiate the price of the car alone and be done with it.
Auto manufacturers and dealerships: if you want people like me to buy more new cars, lobby the government to lessen our tax burden. We not of the 0.1% can't afford to form LLCs in the State of Montana.