It's that time of year, again.
Before fretting over the check you might have to write Uncle Sam in the coming days consider the hefty tax payout the auto industry makes each year – about $135 billion annually, according to a new study by the Center for Automotive Research.
In fact, the industry generates about 13% of all state tax revenues, according to the CAR study which was commissioned by the trade group the Alliance of Automobile Manufacturers, or AAM.
If anything, “As economic conditions continue to improve, auto companies could see an increase in sales and employment that would generate additional state and federal tax revenues,” said Kim Hill, director of the Sustainability and Economic Development Strategies group at CAR and the study’s lead researcher.
About $43 billion of those taxes go to the U.S. Treasury — $14 billion in the form of income taxes and another $29 billion from federal motor fuel taxes.
The study found that $91.5 billion went into various state coffers, equaling about 13% of what the 50 states take in from taxes. Of that, $30 billion comes from taxes and fees on the sale and service of automobiles – half of that from new vehicle sales. The rest, more than $60 billion, is generated from state fuel taxes, licensing and registration fees, according to CAR.
“This study confirms that the U.S. automotive sector has a huge economic impact throughout the country,” added Mitch Bainwol, president & CEO of the AAM, which represents 11 automakers operating in the U.S. “Cars are a massive economic driver, from their production and sales to their use and maintenance.”
California, the nation’s most populous state – and its largest automotive market – generates $10.9 billion in tax revenues from the automobile each year, about 10% of its strained budget. On a percentage basis, Oklahoma ranks number 1, with automotive taxes and fees generating 23% of the state government’s income.
Michigan is the biggest source of income tax revenue for the federal government, automotive workers in the state contributing about $2.2 billion to the U.S. Treasury – and another $104 million to the state. Ohio ranks second, followed by California.
While the tax burden may be significant, the study also noted that total U.S. revenue from the sale of automobiles totaled $564 billion in 2010, with parts, repairs and auto-related services generating another $173 billion – injecting a total of $735 billion into the American economy.
That figure was based on sales of less than 12 million new vehicles. For 2012, the new car market is expected to grow to somewhere in the mid-14 million range. Meanwhile, both new and used vehicle prices are now at record levels, which should significantly boost both the total value of the auto industry and its contribution to federal and state taxes.