How does a state find itself approving a tax exemption just for luxury yachts?
New York’s new budget bill includes an obscure provision, tucked inside section SS, exempting the portion of a boat’s price above $230,000 from the sales tax. That’s about four times as much as the median family in the state earns in a year. The tax break—let’s christen it the SS Giveaway—was quietly inserted into the bill, without public discussion or debate. Some tax cuts are progressive; some are regressive. This one seems almost oppressive.
“Your average Joe in New York who wants to go out and buy a small 16-foot bass fishing boat for his own personal use will actually pay sales tax,” fumed Ron Deutsch, of the progressive Fiscal Policy Institute. “But someone going out and buying a yacht isn’t going to be subject to the same tax.”
There are almost half a million boats already registered in New York. This tax break isn’t aimed at any of them. Instead, it targets the tiny sliver of sales each year in which the most expensive luxury yachts change hands. To dodge state and local sales taxes, their owners set up offshore shell companies, registering their boats in Caribbean islands. So the tax break is aimed at luring these wealthy individuals into registering their boats in New York.