Comedy with the Rental Car Tax

So, I began to think a bit more on Gwinnett County’s plan to fund the Gwinnett Braves stadium with a tax on car rentals. The choice of the commodity chosen to tax is consistent with what many communities have used to fund sports facilities. But, I think that public officials forgot the reason for this tax instrument’s popularity.

The idea is that out-of-town visitors use rental cars during their stay; therefore, the revenue generated by additional use of rental cars ought to help cover the cost of the venue. While the logic behind this assumption doesn’t hold up—the tax seems to be quite distorting—you don’t have to think too hard to see how Gwinnett County doesn’t fit your standard argument for justifying the tax.

The problem is that out-of-town visitors will not be renting cars in Gwinnett. Visitors who fly to see the team will arrive at the Hartsfield-Jackson Airport in Fulton and Clayton counties. Are they going to catch MARTA or take a cab to Gwinnett before getting a rental? And out-of-town visitors who drive don’t need to rent cars.

The only reason to suggest taxing rental cars is that it has been done in several localities to fund sports facilities. But, in most of these cases, the facility is located within the district that is issuing the tax. It would be no more arbitrary for the county to tax dog ownership. Car rentals and stadium use are not connected in Gwinnett County.

Another problem is that taxing rental cars doesn’t have the political cover of taxing outsiders. Who rents cars in Gwinnett County? People who live in Gwinnett County, mostly when their own cars break down. I expect that the county’s demand for rental cars is quite elastic considering that residents ought to be aware of alternatives such as carpooling, public transportation, renting from another county, or borrowing from a friend. This tax probably won’t raise much money, because it’s so easy to dodge, and it will significantly harm to the rental car industry in Gwinnett.

If you are going to raise taxes, please do it as efficiently and equitably as possible. Having rental car companies and those with car trouble foot the bill doesn’t seem like a good solution.

2 Responses “Comedy with the Rental Car Tax”

  1. pawnking says:

    Don’t forget who the tax really hurts, the rental car owners who operate in the county. Out of towners don’t care where the mnoney is going to rent their cars, they pay what they think it’s worth. If you take a percentage of that out for taxes, it’s not really coming from the out of towners, it’s coming right off the top of the rental car owners.

    Once again, free money isn’t free. Someone alway pays.

  2. MelvinNieves says:

    How about hotel taxes to fund stadiums? The concept of tax incidence seems lost on those who think only visitors “pay” those taxes.