Car Tax Redux
The Fifth Dimension Beckons Once More
by Gordon C. Morse
There’s a “sign post up ahead.” Planet car tax looms before us. Once again, we’re on a journey to a wonderous land whose boundaries are only that of imagination.
Jim Gilmore -– a cosmonaut of the first order — launched this trip in 1997, when he successfully sought Virginia’s highest elected office on the promise of kiboshing a principal revenue source for local government.
“No Car Tax,” read Gilmore’s bumper stickers. “Elect me and that goes away,” he roughly vowed.
It doesn’t get more direct than that.
Then, as now, the car tax gets vilified as the one tax that Virginians hate the very most. Where that leaves the state income tax, I’m not sure. Probably offended.
Republican Winsome Sears and Democrat Abigail Spanberger, candidates for governor, have now promised to finish what Gilmore presumably started nearly three decades ago.
You just wish both of them had read up on this a bit. They still could. It’s not too late.
This may be the 453rd time I’ve written on the car tax over the years. “Once more unto the breach, dear friends, once more…”
Gov. Gilmore was smart enough to see the political potential of the car tax’s repeal, but not smart enough to know when he’d won.
Gilmore hatched “No Car Tax” out of focus groups and polling, but never lingered sufficiently over the policy consequences. Tax cut proposals commonly get made during political campaigns, but you cannot reach into a complex, multi-layered state tax system and grab at one thing and start yanking without consideration of other things.
Gilmore did at least produce a number. He assured Virginia that the car tax would cost the state no more than $620 million and, in the long run, that pledge helped save the day.
Everyone remembered that number, partly because very few people believed that number. It was broadly discussed during the 1998 legislative debate and growing doubts shaped the collective thinking on how to get this done.
The lack of certainly – what the future might hold — caused the General Assembly to “phase in” the car tax repeal. The impulse was inherently conservative and quickly got creative. Wouldn’t car tax “relief” work as well as a car tax “cut?”
The consensus answer became “yes” and that explains why Gilmore and the General Assembly never struck directly struck at the car tax at all. To this day, the personal property tax on vehicles — a tax levied by cities and counties on the assessed value of motor vehicles owned by residents – remains on the books, untouched and reasonably content, pumping out revenue to local governments.
What got enacted in 1998? A reimbursement scheme – a state subsidy on the first $20,000 of a vehicle’s value — funded by a line-item in the state budget. Virginia local government would be reimbursed by the Commonwealth for its loss of revenue loss caused by “ending” car tax relief.
How long did it take for the cost of “No Car Tax” to run past Gilmore’s $620 million limit? Not long at all. By 2001, it was clear that the “phasing in” had been a sensible precaution. Lawmakers hit the brakes and Gilmore, even as he faced a slowing economy, dug in his heels.
There was some modest pressure, mostly from the press.
“As President Bush’s hand-picked chairman of the Republican National Committee, Gilmore risks humiliation in Virginia and beyond if he can’t deliver on his promise to fully erase by next year the despised local tax on personal motor vehicles,” wrote Mike Hardy and Jeff Schapiro for The Richmond Times-Dispatch, just as the 2001 General Assembly got underway.
“It’s no wonder the attacks have turned personal, with Gilmore at one point suggesting that voters, who this fall will elect his successor and the 100-member House of Delegates, should retaliate against Republicans and Democrats alike who thwart his will.”
Here’s the thing: Gilmore promised $620 million in tax relief and persuaded the General Assembly to back him on it. He delivered on his campaign pledge. Seldom does political clarity get so clear.
The General Assembly fixed the total annual cost of “No Car Tax” at $950 million and that amount has been appropriated each year since. That amounts to about $25 billion over the years to pretend Virginia cut the car tax.
Still, there was no pretend at the receiving end. While the legislative mechanics may have been more than a little tortured, this was folding money to Virginia’s taxpayers (those owning cars, anyway). Local officials even took to sending out property tax bills with the largesse boldfaced.
Gilmore could have spent his last year in office holding hands with Republican lawmakers, celebrating their mutual accomplishment. They would have gladly done so.
Instead, Gilmore put on his war face and split his party. He willfully, stubbornly, obdurately refused to own up to what was real.
Here’s the succinct sequence:
1997 — “No Car Tax” makes Jim Gilmore governor.
2001 — Gilmore’s enactment of “No Car Tax” makes Mark Warner governor.
One led directly to the other.
How badly did Gilmore mangle his political career? Having laid the foundation for Mark Warner’s political ascendency, Gilmore decided to take on Warner directly in 2008 for retiring John Warner’s U.S. Senate seat.
Gilmore barely won the GOP convention’s nomination against Del. Bob Marshall, a well-established gadfly. The former governor raised only $753,000 in the general election against Warner’s $6.3 million and gathered less than 34 percent of the vote.
Warner may not have even noticed that Gilmore was running. Not for a fleeting second was Gilmore competitive. It was that bad. It’s rumored that Gilmore has run for president twice since.
Quick question: Who was executive director of the Virginia Republican Party when Gilmore launched his bid for governor in 1997 and promised “No Car Tax?”
Chris LaCivita.
Both Gilmore and LaCivita yearned to replace the long-ruling Virginia Democrats with a juiced GOP and approached the task with resolve and populist knuckles bared. It was damn-the-torpedoes, full-steam-ahead.
Sound familiar?
LaCivita thrives on dissident urges and rose, as Donald Trump’s 2024 campaign manager, to the top of the political heap. Gilmore’s experience likely offered him a lesson or two on what works and what doesn’t.
Are there any lessons on the car tax for Spanberger and Earle-Sears?
Yes – from a January 19, 2001, Virginia Bar Association address, also picked up by reporters Hardy and Schapiro:
“Virginians remember what other states have forgotten: Tax policy shaped under campaign pressure soon becomes a bidding war with candidates promising cuts without any idea of how to pay for them,” said the president of the College of William & Mary, Tim Sullivan.
Sullivan was described then as Gilmore’s “most fearless critic,” and he was exactly that. He could not abide political science fiction, not when it came to public finances and the threat fantasy poses to real institutions.
Sullivan fought Gilmore bravely all through that period and history says Sullivan got it right.
Gordon C. Morse has been writing commentary and speeches in Virginia since 1983. This column his republished with permission from his Substack account Heart’s Desire.
