Yacht Exemption Debated
Regarding “New York’s yacht tax break” (Clarion, May 2015): To better understand the reason for special tax breaks for expensive yachts, you have to know the history of the yacht tax. In the 1970s there was a 10 percent luxury tax on yachts. The thinking was that if you were rich enough to buy a yacht, you could afford another 10 percent tax. (A luxury tax existed on many other items also.)
Well, the rich didn’t buy yachts, at least not in the U.S., and many shipyards closed, putting 250,000 shipbuilders – carpenters, plumbers, painters, office workers – out of work. This is not counting the businesses outside of the shipyard, restaurants, groceries, dry cleaners, etc., who lost a great deal of trade. This is why the 10 percent tax was rescinded.
It has taken all these years for the shipyard business to be built up again, and your legislators in Albany wisely want to keep the business here and growing. Those who think that “our government is working for the wealthy” are probably too young to know this history, because in this case the opposite is true.
People have to understand that the rich have the money to spend and can spend it anywhere. They create jobs, and we should not drive business away with high taxes.
Doris Bluth (emerita)
Bronx Community College
Clarion editor Peter Hogness responds: Thanks, as always, for writing.
The recent action of the New York Legislature was not about any special tax on yachts – rather, it gives yachts a special exemption from the general sales tax that must be paid on books, banjos, bicycles and most other consumer purchases. As we reported, the new tax break specifically “eliminates sales tax on the cost of a yacht above $230,000.”
It’s hard to see an economic argument for singling out pleasure boats for this exemption, or for limiting this privilege to boats that only a millionaire could afford. As Ron Deutch of the Fiscal Policy Institute pointed out, “Your average Joe in New York who wants to go out and buy a small 16-foot bass fishing boat” will still pay sales tax on the full price. It’s also hard to blame a sales tax, charged regardless of where something was made, for a shift of production overseas.
In fact, the decline of the U.S. shipbuilding industry in the 1970s and 1980s was not in any way limited to yachts. From yachts to tankers to tugboats, the entire industry was in freefall. From 1981 to 1985, 25 out of 110 shipyards in the U.S. closed their doors – including the General Dynamics shipyard in Quincy, MA, where friends of mine lost their jobs. The causes of this broad decline were many, but a sales tax on yachts was not one of them.
But even if Prof. Bluth’s account was valid, there is a large price to be paid for handing out this kind of special tax exemption. “America’s state tax laws are riddled with carve-outs and loopholes aimed at attracting or retaining businesses,” a writer for The Atlantic observed in May. “In aggregate, they produce an impossibly convoluted and regressive tax code….And governments end up starved for the very revenues these tax cuts are often aimed at securing.”
Labor and Bernie
The 2016 Democratic primary has something pretty nifty: an outright “Democratic Socialist” named Bernie Sanders in the running. Now this white-haired U.S. senator, veteran of countless fights, isn’t what we tend to look for in a presidential candidate. He’s not tall, a little old, and from one of the smallest and whitest states in the Union. So it’s a little bit of a surprise that he was able to out-raise every single other candidate in his first-day fund-raising totals. His launch event was attended by thousands of adoring fans, no small feat in rural Vermont. A grassroots movement launched to support him in tandem with the official campaign, resulting in more than 100 meetups from Florida to Hawaii to Alaska to Maine. One supporter called in from Antarctica. (Really!)
A national “Labor for Bernie” effort is underway, and here in New York there is a very active branch, including our PSC members. Disgruntled teachers, angry at the assault on public education, are likely to be strong supporters of Bernie for his unabashed support for teacher unions in the face of attacks from all sides, including the corporate wing of the Democratic Party.
So this year, I’ll be active in local and constituency groups in support of my candidate so it’s clear that I’m building a stronger, more progressive base for candidates in Brooklyn, New York City and New York State.