“is imposed at a rate of 5% of the gross proceeds of the sale” is a bit ambiguous to me - IANAL, but I could logically see it either way. But, you may be right. The DMV site is less vague: The amount of IMF you owe is based on the sale price of the item you buy. You will owe 5% of the purchase price, but it will be no more than $500. If you purchase an item that is $9,999 or less, your IMF will be 5% of the sale price. If it is $10,000 or more, you will owe $500.
If that is the case, you’re right, essentially all new retail vehicle sales would be >$10k and thus would be taxed at a flat $500. The only thing that leads me to question this is the F&I worksheet I snapped on my (bad) initial lease offer. The vehicle is undoubtedly “selling” for more than $10k, but somehow the tax assessment on the sheet worked out to $471.51. So, I figured it was based on total cost of lease, and the dealership was doing some fancy pre-tax/post-tax BS behind the scenes to show the total cost of the lease as less than $10k. Obviously the total cost of that lease SHOULD be >$10k (incidentally, you’ll note the total cost of lease is not a field on that workbook), so the tax SHOULD be $500 on that deal, no matter which way it’s calculated. But, since it came back slightly less than $500, the only way I can see them figuring that amount is backstage wizardry and tax on total lease cost.