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When New York’s new budget bill was revealed, it contained an obscure provision concerning yacht tax. The portion of a yacht’s price over US$230,000 is now exempt from sales tax in this US state. If you do the maths, this means that yacht buyers are let off the hook for amounts that could come to more than the average US citizen’s earnings in a year.
Nobody knew about this before it happened, or even after it did
Like many other provisions, this tax cut was not discussed or announced. Once it was discovered, the news spread and left a number of individuals less than impressed. The Fiscal Policy Institute’s Ron Deutsch is up in arms about the provision. According to Deutsch it is unfair to the average person who buys an average boat because they have to pay tax in full when those able to afford very expensive yachts are given leniency.
It’s not just New York
Florida capped their boat tax at US$18,000 in 2010. According to yacht salespeople in Florida this measure should not be considered a cap but rather a revenue generator. Buyers are still paying tax, and although it is not as much as before, the difference is apparently more than made up with profits made from job creation. Owners are now more likely to keep boats in Florida, where locals are employed to repair, renovate and resupply them. Other states along the East Coast soon saw that there is method in Florida’s madness and Maryland followed with a cap of US$15,000 in 2013. New Jersey is catching on and earlier this year legislators suggested a US$20,000 cap.
A drop in the ocean
Although Ron Deutsch is not happy with the new budget bill, Republican Leader Dean Skelos is more positive about it. His stance is that it creates jobs and gives New York a more competitive edge. Besides this proviso being quite commonplace, the American tax system is full of legal loopholes and shortcuts to accommodate businesses and individuals that help the economy grow. As unfair as it may seem, the top 1% of Americans pay half as much tax as the bottom twenty percent and governments end up desperate for the revenue the tax cuts are aimed at securing. The tax break for yachting enthusiasts may well be one of the smallest cuts around.