Trade in Value

[X5FX]

Originally Posted by X5 Guy

Many people used to sell a car for $1.00 but it was actually worth $30,000 thus keeping the tax payment low for the buyer.

This just doesnt happen anymore. States use book values to determine tax base.

[cpatzer]

Originally Posted by X5FX

Not in Louisiana, I also doubt most states do this...its called double taxation. You have already paid sales tax on the first vehicle.

EDIT:
Actually looks like MOST states DO ALLOW this to happen, as I originally stated:
http://www.michigan.gov/documents/485_72279_7.pdf
http://www.safecarguide.com/gui/old/disposing.htm
http://www.window.state.tx.us/taxinf.../tx96_116.html

the list goes on...just try google.

looks like Virginia is one of the few states that does not do this, but its likely because you only pay 3% tax whereas most states charge 7-9%

Washington State does the same thing. Only California charges tax twice (that I know of) I don't even know how California gets away with it. That is double taxation. Why? You already paid tax on the price of the original car. Every other state you get a tax credit on your trade.