In the past few years car donation has become a popular method for many charitable Americans. The reason is obvious; it just makes sense. Charitable organizations squeeze a decent sum out of the donated cars, and the donators get to deduct the retail values of their cars from their tax bills.
It’s been a win-win process, until the government decided that it was losing money on the deal. Many of the donated cars were worth below their reported values, thereby the donators were deducting more than their donated property was worth. And so starting January 2005, the IRS slammed the door shut on the over-estimators. Now people who donate their cars must produce a document from the charitable organization specifying the resale price of the car after the car is sold off. Automobiles with retail values up to $500 are exempt from this rule however.
Now I think keeping the taxpayers honest is just fine. But now let's see how people are assessed for the automobile property taxes. Here's an excerpt from a town in Connecticut:
Connecticut Assessors, utilize the NADA (National Automobile Dealers Association) appraisal guide for automobile valuations. We take 70% of the published average retail selling price to calculate the assessment.
In effect here's what the government is telling Joe Citizen: "We'll tax your car based on an arbitrary listing. But if you donate the car, you can only deduct the true value of the car and you must produce supporting documentation."
Don't you just love government racket?