National Consumers League

Fighting excessive rental car taxes


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By Jacob Markey, NCL LifeSmarts intern

Jacob is the National Consumers League’s LifeSmarts intern this summer. He will be a senior at the University of Wisconsin-Madison in the fall, majoring in political science with a certificate in business.
On only my fifth day as an intern at the NCL, I had the extraordinary opportunity of witnessing Sally Greenberg testifying on Capitol Hill in support of H.R. 4175, a bill that would eliminate the ability of state and local municipalities to levy future discriminatory taxes on renting cars. What sounds like a mundane issue is actually a growing source of contention. Many municipalities erroneously believe the average person who rents cars is someone from out of state on a vacation or business trip. Yet, a substantial subsection of the car rental population is actually local residents, such as someone who needs a car for a week after a car accident, the consumer who needs a car for grocery shopping on a weekend, or even a family that rents a car to help drive their child to college. Unfortunately, many municipalities have their eyes set on instituting rental car taxes to generate revenue. Back home in Milwaukee, there is talk about raising rental car rates in order to fund a commuter train in Southeastern Wisconsin. Sally noted in her testimony that while some purposes are valid, these taxes often go towards what many would consider unnecessary private projects, such as new stadiums and performing arts centers. She mentioned that the number of rental car taxes has exploded, with 118 separate car rental taxes in 43 states and the District of Colombia today, eight times that of 20 years ago, and exponentially more than the single case found in 1973. As they can add as much as $15 to a $25 rental, more than a 50 percent increase, it should come as no shock that they have raised a substantial amount of revenue -- according to industry research, more than $7.5 billion. Regardless, many people support these taxes with the false expectation that this is a method to effectively tax tourists from out of town to fund tourist attractions. Additional statistics from the rental car industry demonstrate that discriminatory rental car taxes disproportionately affect the poor and minorities. The Brattle Study, conducted by the Brattle Group, notes that 19 percent of car rental taxes are paid by families earning less than $50,000 per year, and that African Americans pay 27 percent of rental car taxes, even though they represent only 12 percent of the population. H.R. 4175 represents an opportunity for consumers to fight back against unnecessary, excessive taxation to pay for politicians' pet projects and for all those who feel they are “nickled and dimed” to stand up to the taxation. The National Consumers League is joined by a wide range of organizations in support of this bill, spanning from the American Car Rental Association to the United Auto Workers, and the National Urban League. We urge you to take a stand against these types of unwanted taxes by contacting your local representative and asking them to join us in support of this bill as well to ensure that these unfair taxes are eliminated.