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Automakers aren’t against them selling direct, dealers are. And it’s illegal for automakers to do so because automakers tried to kill dealers earlier on and tak

Automakers aren’t against them selling direct, dealers are. And it’s illegal for automakers to do so because automakers tried to kill dealers earlier on and take over the sales channels dealers built out. Plus for communities, it’s more beneficial than they’re locally owned versus all of the money flowing out.

ComputerGuru 6y ago
Only net profit to the owner flows out of the community. The money going to employees at the branch/showroom (which would still be retained, as they serve a purpose regardless of who runs them) is still retained in the community. Given how many auto dealerships are franchises owned by out-of-town individuals or groups, it’s already the case anyway.
hedora 6y ago
I don’t buy the idea that dealerships benefit communities. If they simply charged sales tax based on the address of the purchaser, it would be more equitable. The current law creates local dealership monopolies, and the dealerships provide terrible service, and rip everyone off as a result. If you don’t like it, you have to drive dozens of miles to go to a competitor (and car purchases invariably involve multiple trips). Cities want the sales tax revenue, so they give the dealerships huge tax breaks to attract them. The whole system should be scrapped.
- reaperducer 6y ago
  I don’t buy the idea that dealerships benefit communities. It's a method of spreading the wealth. The model increases the number of people employed and businesses involved, both directly and indirectly, exponentially.
  - gruez 6y ago
    You're not wrong, but there are far better ways to redistribute wealth than mandating the use of rent-seeking middlemen. Why not levy a tax directly and cut out the middle man?
    - renewiltord 6y ago
      Because the step past that of using the tax to redistribute is politically infeasible. It's like "Why not get rid of tipping and just give waiters a tax benefit?". Well, turns out we can't do the second piece so that's why we don't do the first piece.
      - AnthonyMouse 6y ago
        If the purpose of dealership laws is redistribution then to get dealership laws you need enough public support for it to pass a law, in which case it might as well be the good law instead of the garbage one. Moreover, this is exactly the sort of thing where the bad is the enemy of the good. If redistribution is good and cronyism is bad then allowing the cronyist redistribution law to pass not only placates the people who want redistribution (and so they fight less for the better one), it also inflames the good should-be-allies anti-cronyists and requires you to waste political capital on infighting. Bad compromises are bad. Good law > nothing > bad law.
        renewiltord 6y ago
        Usually when you do things like this, you package it in a defensible way. So maybe you decide you want some redistribution, but that's politically infeasible. Instead you package it as something else. Another example is most big infrastructure projects in California. You'll notice that most don't finish in time. The real reason is to ensure that there is sustainable construction work going on. They're capable of finishing fast but no one wants that. They just want a large number of people employed. The Trojan Horse is "we're building infrastructure" because otherwise you have to fight the anti-redistribution anti-subsidy people. That's because when a concession is made to people they rarely will fight to make it perfect in the name of perfect is the enemy of good enough. Anti-cronyists don't expend political effort because they don't have upper-level political support. It's not a thing anyone needs to worry about. Only people who want to get something concrete and people in danger of losing something concrete expend political effort.
        6y ago
  - WillPostForFood 6y ago
    It is inherently unequal though. Not every community gets a dealership, especially poor neighborhoods. But they do have car purchases. If sales were online, and sales tax distributed by purchaser addresses, the tax revenue would be much more broadly spread out.
    - smileysteve 6y ago
      You're discovering the regressiveness of the sales tax. Instead of a sales tax, let that person spend that money on other products and services. And to raise revenue, use a progressive tax such as income.
  - _jal 6y ago
    Entertainingly, dealership owners are notoriously Republican-leaning. Perhaps they just need a bit of help staying true to their free-market ideals some times.
    - lotsofpulp 6y ago
      I was not aware Republicans had free market ideals. Based on their actions at least.
      - AnthonyMouse 6y ago
        It depends whether you're talking about the politicians or the constituents. There are plenty of Republican voters with free-market ideals, because who else are they going to vote for? Bernie Sanders? But the politics is systemic corruption. To get elected, both parties have to raise money from somebody, and not a lot of those "donors" are buying politicians because they want fairness and free market competition.
  - landryraccoon 6y ago
    Is this the same logic that leads to making it illegal to step out of your car to pump gas, because the attendant at the gas station needs a job?
- dhosek 6y ago
  In Illinois and California, at least, the sales tax rate for cars is based on the purchaser's residence. I think though, that the bulk of the tax revenue goes to the location of the dealer (but I could be wrong). Purchasing out of state is generally discouraged by having the purchaser pay at least the difference in tax rates if the purchase was less than a specific time since the arrival of the car in state.
  - pfranz 6y ago
    This article implies it's based on the dealer location in California https://www.caranddriver.com/research/a31548432/california-car-sales-tax-calculator/ https://www.caranddriver.com/research/a31548432/california-c... I seem to remember tax based on the purchase location when I bought a car a few years ago in California.
    - dhosek 6y ago
      It might have changed, but I remember ads from dealers on just the LA side of the LA-San Bernardino county line advertising that sales tax was based on the purchaser's address. That was still the case in 2014 according to the L.A. Times [1]: >There’s no advantage, in terms of sales tax, on where you go to buy a car. An Orange County resident who buys a car in Santa Monica will stay pay the Orange County sales tax rate. The sales tax rate is charged based on where the car will be registered. I suspect that the Car and Driver article was poorly researched and factually incorrect. [1] https://www.latimes.com/local/california/la-me-aa2-snapshot-sales-tax-20141128-story.html https://www.latimes.com/local/california/la-me-aa2-snapshot-...
- closeparen 6y ago
  It's a hell of a stretch to call a built environment with a car dealership in it a "community." These things are blighted dead space, and they belong out of the way.
guntars 6y ago
It would be more beneficial for communities to not pay the "dealer tax". Why do we need to support a group of people whose job can largely be done by an app these days?
- toomuchtodo 6y ago
  Having bought several Tesla vehicles from Tesla, all requiring back and forths with local service due to manufacturing issues, their process leaves much to be desired (both purchase and servicing). “Largely done by an app” is not an accurate representation of the problem space.
  - drdeadringer 6y ago
    What is "the problem space" here then?
  - taftster 6y ago
    So that's a justification for the "dealer tax"? That the process is not "largely done by an app"? Seems to me that if the process cannot be streamlined by an app, that the process is wrong. Growing pains for this industry, I get it. But it shouldn't really be any harder than what an 'app' can provide. Give me a few model options, click 'Buy'.
    - toomuchtodo 6y ago
      I’m not saying the dealer tax is warranted (absolutely not), I’m saying it’s still a lot of human effort even if you streamline the process with an app (financing, tax, title, licensing, vehicle defect issues, etc). Tesla totally botched my first Model S purchase and I was stuck for two days out of state while they fixed my purchase contract and my financing. This was after having bought through their website. Just as high touch enterprise sales is here to stay, so is a human in the loop for auto purchases. You are not the average consumer if you’re here. Your average consumer will not tolerate rough edges of an app when spending $37k.
      - 6y ago
cma 6y ago
> Plus for communities, it’s more beneficial than they’re locally owned versus all of the money flowing out. It means a new concentrated powerful special interest in their local area can outbid them, in their diffuse helplessness, in influencing politics.
- notfromhere 6y ago
  Do you prefer a concentrated powerful special interest that’s in a HQ far away instead?
  - cma 6y ago
    I just mean for their local politics. It is basically creating an artificial "big man" in the community.

ComputerGuru 6y ago

Only net profit to the owner flows out of the community. The money going to employees at the branch/showroom (which would still be retained, as they serve a purpose regardless of who runs them) is still retained in the community. Given how many auto dealerships are franchises owned by out-of-town individuals or groups, it’s already the case anyway.

hedora 6y ago

I don’t buy the idea that dealerships benefit communities. If they simply charged sales tax based on the address of the purchaser, it would be more equitable. The current law creates local dealership monopolies, and the dealerships provide terrible service, and rip everyone off as a result. If you don’t like it, you have to drive dozens of miles to go to a competitor (and car purchases invariably involve multiple trips). Cities want the sales tax revenue, so they give the dealerships huge tax breaks to attract them. The whole system should be scrapped.

reaperducer 6y ago
I don’t buy the idea that dealerships benefit communities. It's a method of spreading the wealth. The model increases the number of people employed and businesses involved, both directly and indirectly, exponentially.
- gruez 6y ago
  You're not wrong, but there are far better ways to redistribute wealth than mandating the use of rent-seeking middlemen. Why not levy a tax directly and cut out the middle man?
  - renewiltord 6y ago
    Because the step past that of using the tax to redistribute is politically infeasible. It's like "Why not get rid of tipping and just give waiters a tax benefit?". Well, turns out we can't do the second piece so that's why we don't do the first piece.
    - AnthonyMouse 6y ago
      If the purpose of dealership laws is redistribution then to get dealership laws you need enough public support for it to pass a law, in which case it might as well be the good law instead of the garbage one. Moreover, this is exactly the sort of thing where the bad is the enemy of the good. If redistribution is good and cronyism is bad then allowing the cronyist redistribution law to pass not only placates the people who want redistribution (and so they fight less for the better one), it also inflames the good should-be-allies anti-cronyists and requires you to waste political capital on infighting. Bad compromises are bad. Good law > nothing > bad law.
      - renewiltord 6y ago
        Usually when you do things like this, you package it in a defensible way. So maybe you decide you want some redistribution, but that's politically infeasible. Instead you package it as something else. Another example is most big infrastructure projects in California. You'll notice that most don't finish in time. The real reason is to ensure that there is sustainable construction work going on. They're capable of finishing fast but no one wants that. They just want a large number of people employed. The Trojan Horse is "we're building infrastructure" because otherwise you have to fight the anti-redistribution anti-subsidy people. That's because when a concession is made to people they rarely will fight to make it perfect in the name of perfect is the enemy of good enough. Anti-cronyists don't expend political effort because they don't have upper-level political support. It's not a thing anyone needs to worry about. Only people who want to get something concrete and people in danger of losing something concrete expend political effort.
        6y ago
- WillPostForFood 6y ago
  It is inherently unequal though. Not every community gets a dealership, especially poor neighborhoods. But they do have car purchases. If sales were online, and sales tax distributed by purchaser addresses, the tax revenue would be much more broadly spread out.
  - smileysteve 6y ago
    You're discovering the regressiveness of the sales tax. Instead of a sales tax, let that person spend that money on other products and services. And to raise revenue, use a progressive tax such as income.
- _jal 6y ago
  Entertainingly, dealership owners are notoriously Republican-leaning. Perhaps they just need a bit of help staying true to their free-market ideals some times.
  - lotsofpulp 6y ago
    I was not aware Republicans had free market ideals. Based on their actions at least.
    - AnthonyMouse 6y ago
      It depends whether you're talking about the politicians or the constituents. There are plenty of Republican voters with free-market ideals, because who else are they going to vote for? Bernie Sanders? But the politics is systemic corruption. To get elected, both parties have to raise money from somebody, and not a lot of those "donors" are buying politicians because they want fairness and free market competition.
- landryraccoon 6y ago
  Is this the same logic that leads to making it illegal to step out of your car to pump gas, because the attendant at the gas station needs a job?
dhosek 6y ago
In Illinois and California, at least, the sales tax rate for cars is based on the purchaser's residence. I think though, that the bulk of the tax revenue goes to the location of the dealer (but I could be wrong). Purchasing out of state is generally discouraged by having the purchaser pay at least the difference in tax rates if the purchase was less than a specific time since the arrival of the car in state.
- pfranz 6y ago
  This article implies it's based on the dealer location in California https://www.caranddriver.com/research/a31548432/california-car-sales-tax-calculator/ https://www.caranddriver.com/research/a31548432/california-c... I seem to remember tax based on the purchase location when I bought a car a few years ago in California.
  - dhosek 6y ago
    It might have changed, but I remember ads from dealers on just the LA side of the LA-San Bernardino county line advertising that sales tax was based on the purchaser's address. That was still the case in 2014 according to the L.A. Times [1]: >There’s no advantage, in terms of sales tax, on where you go to buy a car. An Orange County resident who buys a car in Santa Monica will stay pay the Orange County sales tax rate. The sales tax rate is charged based on where the car will be registered. I suspect that the Car and Driver article was poorly researched and factually incorrect. [1] https://www.latimes.com/local/california/la-me-aa2-snapshot-sales-tax-20141128-story.html https://www.latimes.com/local/california/la-me-aa2-snapshot-...
closeparen 6y ago
It's a hell of a stretch to call a built environment with a car dealership in it a "community." These things are blighted dead space, and they belong out of the way.

guntars 6y ago

It would be more beneficial for communities to not pay the "dealer tax". Why do we need to support a group of people whose job can largely be done by an app these days?

toomuchtodo 6y ago
Having bought several Tesla vehicles from Tesla, all requiring back and forths with local service due to manufacturing issues, their process leaves much to be desired (both purchase and servicing). “Largely done by an app” is not an accurate representation of the problem space.
- drdeadringer 6y ago
  What is "the problem space" here then?
- taftster 6y ago
  So that's a justification for the "dealer tax"? That the process is not "largely done by an app"? Seems to me that if the process cannot be streamlined by an app, that the process is wrong. Growing pains for this industry, I get it. But it shouldn't really be any harder than what an 'app' can provide. Give me a few model options, click 'Buy'.
  - toomuchtodo 6y ago
    I’m not saying the dealer tax is warranted (absolutely not), I’m saying it’s still a lot of human effort even if you streamline the process with an app (financing, tax, title, licensing, vehicle defect issues, etc). Tesla totally botched my first Model S purchase and I was stuck for two days out of state while they fixed my purchase contract and my financing. This was after having bought through their website. Just as high touch enterprise sales is here to stay, so is a human in the loop for auto purchases. You are not the average consumer if you’re here. Your average consumer will not tolerate rough edges of an app when spending $37k.
    - 6y ago

cma 6y ago

> Plus for communities, it’s more beneficial than they’re locally owned versus all of the money flowing out. It means a new concentrated powerful special interest in their local area can outbid them, in their diffuse helplessness, in influencing politics.

notfromhere 6y ago
Do you prefer a concentrated powerful special interest that’s in a HQ far away instead?
- cma 6y ago
  I just mean for their local politics. It is basically creating an artificial "big man" in the community.