Tuesday, July 27, 2010

Boat tax

US Senator John Kerry made the news this week. Here is the story as reported by IBI Magazine:

By berthing his new $7m custom built 23m (76ft) sloop Isabel in Rhode Island as opposed to his home state of Massachusetts, US Senator John Kerry is saving a tax liability of $437,000 in a one-time sales tax and some $70,000 on local boat taxes.

Built by Friendship Yachts in New Zealand, Isabel is being kept at the Newport Shipyard on Rhode Island and not at Nantucket near Kerry's summer house, or Boston, close to his city residence. Kerry's spokesman David Wade said that Isabel was being kept at Newport "for long-term maintenance, upkeep and charter purposes".

Kerry has been criticised for avoiding tax payments and for not having had the yacht built locally where a number of boatbuilders are experiencing tough times. Ted Fontaine, the Rhode Island-based yacht designer, designed Kerry's yacht.

Rhode Island abolished its boat taxes in 1993, which has resulted in a boost for the local yachting industry and made the state a sailing tax haven. If the yacht is berthed in Massachusetts within the next six months, then she will be liable for the taxes.

Is this a debate of how a government official should be held to a higher standard than the citizens he has been elected to govern? Or, is this an example of a person exhibiting the economic wits that are desired for a government official? Maybe just a big misunderstanding?

Here are the comments from the Scuttlebutt Facebook page:

Lorraine Stanley: If the Isabel is in Newport for "charters," does this mean he can write off part or all of his storage, dockage, and maintenance expenses? If so, that's just as big a dodge as the rest of this foolishness.

Michael Harnois: C'mon. He's not doing anything that the rest of wealthy residents of the Commonwealth don't do. If it's legal, then I don't understand what the problem is.

Rick Day: Good for him! If it's a legal loophole, he'd be silly not to use it. We are only under obligation to pay the minimum taxes we have to pay. Paying any more than you have to is silly.

Richard Clark: if you don'y see a problem then I guess you are part of the problem :)

Sven Finnis: Maybe he just prefers sailing out of Rhode Island, the sailing capital.

Willie Blevins: let's see, save a half million dollars, leave your boat in the sailing capitol of the US, if not the world, and do it legally? I would think even those with diminished mental ability could do that arithmetic...

Andrew Vare: If he takes that write off then he also has to stand up to the scrutiny.Sailboarding and dinghies rock!

Jeff Wilson: In the '80's I delivered several boats from SF bay area to Oregon, where the new owners took possession to avoid the CA sales taxes...nothing really new or illegal...

Tom DeSantis: ‎@Jeff: were all your owners United States Senators and former Presidential candidates from liberal Massachusetts?

Oren Beach: If a boat is built overseas, it cannot be used for chartering in the US. This is to protect US boat builders. I am sure plenty of people pay no attention to this and John Kerry will be one of them as well.

Johnny May: If he sails by me I'll give him a cross, he's just another sailor...

Robert Winess Not illegal nor unethical. Just something for people to bitch about. But if he gets caught with a Thai hooker onboard - whoa!!! There's a story!!!

Barrett Canfield: The loophole has always been there, but a U.S. Senator should lead by example....and pay taxes.

Robert Winess: It's not a loophole when it's open and apparent. It's simply the law. Kinda like companies that move to Florida because there is no State income tax. Call it fortunate luck that there is a State in close enough proximity that chooses not to charge tax. Go Rhode Island!!!

Johnny May: Yep to above ^

Michael W Dragon: Sounds like a prudent move...good for him. Maybe Mass will take the hint.

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At 12:54 PM, Anonymous Latitude 38 said...

After a hurricane of public outrage, Massachusetts Senator John Kerry has decided that he will pay $450,000 in sales tax to the state of Massachusetts following the purchase of his $7 million Ted Fontaine-designed 76-ft sailing yacht Isabel. By keeping the boat in neighboring Rhode Island, it had not been subject to the tax.

What Senator Kerry cannot undo is the fact that he had a $7 million yacht built in New Zealand rather than New England. It's a big deal to a lot of people in his neck of the woods.


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