2007 Regional Annual Household Transportation Tax Index
Methodology
There are five types of public entities that have the authority to impose and collect taxes related to transportation in the Puget Sound. These are the federal government, state government, counties, cities and special districts created by the state, such as Sound Transit and the RTID.
These groups have a variety of financial powers that are used to support transportation related services. For example, the state has more than 60 types of transportation taxes and fees. Most of these assessments however, do not affect many people and therefore do not have a consistent impact on a household budget. Some of these include aircraft fuel taxes, log truck permits, and vessel fees.
Other taxes are paid out of a family budget more consistently and can be measured in a household transportation tax index. They include sales and fuel taxes, annual vehicle registration fees and the motor vehicle excise tax.
Until now, it has been difficult to understand how these tax burdens add up in the context of an average family budget. Public agencies attempt to illustrate their ‘bottom line’ costs, but without the perspective of how much we currently pay it is difficult for taxpayers to judge the actual burden.
Creating a regional transportation tax index shows how much the average household currently pays in transportation related taxes in King, Pierce and Snohomish Counties.
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Public Transportation
There are four county or city public transportation systems in King, Pierce, and Snohomish Counties. Each system possesses a sales tax authority to fund its own services. Pierce Transit and Everett Transit impose a 0.6% sales tax and King County Metro and Snohomish Community Transit impose a 0.9% sales tax. Generally, each 0.1% sales tax cost a household about $25 per year.[1] So the average family in King County pays about $225 per year in sales taxes to fund King County Metro.
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Car Tabs
Vehicle owners must pay an annual vehicle registration fee for the privilege of driving a car in Washington. The base registration fee is $30 a year. Car tabs also include a weight fee, which is based on the gross vehicle weight. The scale is $10 for vehicle weights between 0-4000 lbs, $20 for weights between 4001-6000 lbs, and $30 for vehicles weighing between 6001-8000 lbs.[2] The Tax Index assumes an average vehicle weight fee of $10 per vehicle and an average of 2.01 vehicles per household when calculating the total annual vehicle registration fee. Therefore, on average, a household pays about $80 per year in vehicle registration fees.[3]
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Seattle Street Maintenance Proposition
In 2006, voters in Seattle approved a road maintenance measure, which increased property tax collections in the city by $365 million over nine years. Seattle households now pay an average of $144 more per year for the street maintenance proposition.[4]
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Sound Transit, Phase 1
In 1996, Puget Sound voters approved Sound Move, the first phase of Sound Transit. The plan imposed a ten-year 0.4% sales and use tax increase and a 0.3% Motor Vehicle Excise Tax (MVET) and consisted of a commuter rail service, a regional bus system connecting Pierce, Snohomish and King Counties, and Washington’s first light rail segment. At the time Sound Transit officials said it would cost $3.9 billion (in 1995 dollars) and take 10 years to complete. Sound Transit now says the cost of its first phase is approaching $15 billion (Year of Expenditure) and they will not complete it until 2020.
Generally, each 0.1% sales tax reduces household income about $25 more per year and each .1% MVET equals $17.88 per vehicle.[5] Combining the sales tax and MVET, shows that households currently pay an average of $208 per year for the first phase of Sound Transit.
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Fuel Tax
Washington drivers must pay both a state and federal per-gallon gas tax when purchasing fuel. The current federal gas tax is 18.4 cents per gallon and the state gas tax (as of July 2007) is 36 cents per gallon. Fuel tax estimates are based on an average of 15,000 miles per year at 22 mpg. The gas tax amounts also assume 2.01 cars per household. This means the average family pays about $745 in annual fuel taxes.
[1] The sales tax calculation is the generally accepted model for public agencies and is the same assumption adopted by the RTID, Sound Transit and King County for their financial estimates.
[2] http://www.dol.wa.gov/vehicleregistration/fees.html
[3] It should also be noted that most households pay the MVET in combination with their vehicle registration fees. So car tabs will appear larger than the average of $40 per vehicle listed here. This Policy Brief does include the MVET, but only in combination with the agencies that impose it.
[4] A $400,000 home in Seattle would have an increased property tax burden of $144 annually.
[5] The sales tax calculation is the generally accepted model and is the same assumption adopted by the RTID, Sound Transit and King County for their financial estimates. The MVET calculation is based on RTID’s estimates in its Blueprint for Progress; RTID calculates $143 in MVET for each vehicle owned. As a result, using the average value of a vehicle, each .1% of MVET translates to $17.88 per vehicle. Also assume 2.01 cars per household.