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Our law firm serves the Memphis tri-state area of western Tennessee, northern Mississippi and eastern Arkansas. Of the three states, only two have banned the so-called crash tax applied in motor vehicle accidents: Tennessee and Arkansas. As time goes on, it’s likely that Mississippi will follow suit.

The crash tax is a measure that has been instituted in cities across the nation from New York to California. Supporters – who tend to be city managers and administrators dealing with budget-cuts – characterize the crash tax as a way to recoup the cost of responding to a car wreck and cleaning it up. Crash taxes range from around $200 to $2,500 and higher per accident, depending on locale.

But what has most people in opposition to the crash tax is how it’s administered: crash taxes generally apply only to out-of-town motorists – whether or not they’re responsible for the car wreck.

According to National Public Radio, the crash tax has begun to be repealed in some cities and outright banned by state legislatures. So far, 10 states have made the crash tax illegal, including Tennessee and Arkansas.

The biggest problem with the crash tax, in our opinion, is that it’s not covered by most basic auto liability insurance policies, which typically cover the usual suspects: damage to property and injury to motorists and passengers.

The crash tax is just another added burden on those who are involved in a motor vehicle accident – applied to out-of-town motorists who may not even have been at fault – and may be billed to innocent out-of-town motorists who were involved in, for example, hit and run accidents or drunk driver accidents.

Source: ‘Crash Tax’ More Bust Than Boom For Many Cities