Motoramic

The real costs of owning a car — and why Georgia isn’t the most-expensive state

For the last several weeks, this study on the cost of automotive ownership ranked by state has been all over — published, broadcasted nationwide, and blogged hundreds of times. According to Bankrate.com, Georgia, California and Wyoming are the three most expensive states in which to own a vehicle, with Georgia ownership costing $4,233 a year, while Oregon is the cheapest at $2,204.

There is only one problem with the findings: They're simply wrong.

Let's focus on two states with similar populations but strikingly different totals, New Jersey and Georgia. I just so happen to have a keen working knowledge of car ownership costs in both states from living in them and my career as a car dealer:

Bankrate's estimated annual cost of car ownership
Rank State Repairs Taxes/fees Gasoline Insurance Total
1 Georgia $385 $1,952 $1,129 $767 $4,233
23 New Jersey $393 $915 $830 $1119 $3,257

While fuel and insurance costs differ, they cancel each other out in the rankings; the largest difference comes from taxes and other fees, where the study finds the average Georgian supposedly pays $1,952 a year — more than double the cost of taxes than the average New Jerseyan. This one finding alone propels Georgia to the highest cost of ownership in the country, while keeping New Jersey in the healthy middle of the pack.

Remember, this is supposedly the costs an average owner — not merely those buying or selling a vehicle — pays every year for their vehicle.

So what are the taxes and fees for these two states?

New Jersey Georgia
Sales and/or Title Tax 7% 6.5%
Registration Renewal $35 to $85 $20
Emissions $20 $20
One-Time Tag Fee $0 $20
Title Processing Fee $60 to $85 $18
Tolls The NJ Turnpike Atlanta's I-85 express lanes

New Jersey is higher overall; although both states offer a bit of positive and negative weirdness in those numbers. New Jersey requires all new car owners to pay four years of registration renewal fees in advance, while Georgia recently passed a title tax to replace the sales tax. Like most other states, farmers, senior citizens and a long line of others get a discount or an exemption.

But under any interpretation, there is no way given the numbers above that the average Georgian pays more than twice as much as the average New Jerseyan. And such a result doesn't pass the common-sense test: Georgia now ranks 40th in per capita income while New Jersey ranks 3rd. The tax base is smaller in Georgia, as is the state government's needs. New Jersey will collect an estimated $31.3 billion in revenues for 2013, while Georgia is slated to collect $19.3 billion.

Nearly all states focus on taxing purchases, and Georgia is no exception to this rule. But if you're not buying a vehicle, the tax costs related to owning it remain low. Once that vehicle is purchased, all of the other registration taxes and fees going forward amount to about $25. There are no annual ad valorem taxes for the vehicle after it has been purchased and no local taxes. Annual registration renewals are $20, driver licenses cost less than $5 a year, and the state has almost no toll roads, especially compared with New Jersey and the infamous New Jersey Turnpike.

As for the big tax numbers given to your state, those are likely wrong as well, for similar reasons. Average vehicle in the United States is now approximately 11.5 years old (11.4 for cars, 11.6 for trucks), and the average length of ownership is now nearly six years according to the survey firm R.L. Polk. Overall, when it comes to directly taxing residents for their vehicles, most states are not nearly as brutal as the Bankrate.com study suggests. It's results also conflict with the AAA's annual driving cost calculation, which estimates the average car owner paid $610 in 2012 in taxes, licenses and other fees

There's a bigger point to this confusion: There are hidden costs to car ownership, and they have grown so much as to make budgeting a challenge. Direct taxes, those the government charges for you to own and drive a vehicle, are easy to add up; In Georgia those amout to about $115 a year before taking into account gas taxes, state fees for insurance and other minor costs.

It's the hidden fees that every driver face that now amount to quite a bit of the average vig. These include:

Emissions Related Repairs: Those of us who are in emission counties may wind up spending as little as $15 on an emissions test, or well over $1,000 in vain attempts to get our vehicles to pass. States typically do not collect these fees. However, this does represent a cost of ownership that is rarely mentioned or calculated.

Roads: The weather and climate in a given state, along with the number of commercial vehicles passing through it, can impact the cost of those roads and your own repair bills. Bad roads are stressful on suspensions, and your wallet takes a direct hit on this.

Tolls: You would think this calculation would be easy. Privatization, and the common practice of co-mingling of public tolls into state general funds, makes this an exercise in futility.

Speed Traps: From podunk towns to major cities, the use of speed cameras as nannies to improve the local revenue base is making car ownership a needlessly expensive and miserable experience in some locations.

Are we taxed too much? Absolutely. But beyond this general sentiment lies a more important truth.

Our driving habits and attention to maintenance have a far greater impact on what we pay to everybody. If you take care of what you have, you don't have to spend money. You don't have to buy anything but the basic costs to drive your car.

So you want to lower your taxes? Then make your car a keeper — and if you ever find yourself in New Jersey, avoid the Turnpike.

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