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Monday, July 26, 2010

Credit to the radio caller I heard on my drive home for that title.

Taxes for thee, but not for me...Sen. John Kerry skips town on sails tax

Sen. John Kerry, who has repeatedly voted to raise taxes while in Congress, dodged a whopping six-figure state tax bill on his new multimillion-dollar yacht by mooring her in Newport, R.I.

Isabel - Kerry's luxe, 76-foot New Zealand-built Friendship sloop with an Edwardian-style, glossy varnished teak interior, two VIP main cabins and a pilothouse fitted with a wet bar and cold wine storage - was designed by Rhode Island boat designer Ted Fontaine.

But instead of berthing the vessel in Nantucket, where the senator summers with the missus, Teresa Heinz, Isabel's hailing port is listed as "Newport" on her stern.

Could the reason be that the Ocean State repealed its Boat Sales and Use Tax back in 1993, making the tiny state to the south a haven - like the Cayman Islands, Bermuda and Nassau - for tax-skirting luxury yacht owners?

Cash-strapped Massachusetts still collects a 6.25 percent sales tax and an annual excise tax on yachts. Sources say Isabel sold for something in the neighborhood of $7 million, meaning Kerry saved approximately $437,500 in sales tax and an annual excise tax of about $70,000...

"We, are the makers of taxes, Teresa." - a revised Henry V

Don't miss the bigger point: The super rich never care about raising taxes because they have a million and one ways of avoiding them. In fact, supporting increased taxes provides them with a chance to strike a self-righteous pose and make it look like they're willing to sacrifice like the rest of us when the truth is that they know they'll never have to pony up.

Kerry, confronted [link via Sister Toldjah]:

...There's nothing more to say about it. I have said-- wait a minute, let's get this very straight, I've said consistently we will pay our taxes, we have always paid our taxes. It's not an issue. Period. We've always paid our taxes; we'll pay our taxes...

Beside the point. The greater point is not whether there's anything illegal going on (though it would be pretty sweet if there were), it's just whether Kerry is will to put his wife's wallet where his votes are:

...When asked "Did you berth the boat in Massachusetts?" he replied, "That depends on who owns it."

Then, he said to his driver, "Can I get out of here please?"

4 Comments

Has anyone who reads or writes this blog offered to pay more taxe? Do we all not deduct everything we can legally deduct and take advantage of every tax saving opportunity we can? Of course we do. But when a U.S. senator does exactly the same, we go all ape shit calling him a miserable corrupt tax dodger. Wanna collect proper taxes for mooring a boat, have every state agree to harmonize their taxes. Since this will never happen why not look at the states as the source for unevan taxation. Here's an example. Florida has no state income tax. California state income tax ranges from 1% to 10.3%. Is this fair?

"Has anyone who reads or writes this blog offered to pay more taxe?"

Of course not. I'm for lower taxes and people taking every break they can get...unlike John Kerry. It's the hypocrisy that's the problem. That's the point.

Florida has no state income tax. California state income tax ranges from 1% to 10.3%.
Bingo!

That's why Lebron James went to Miami. The other offers would have had to be for LOTS more in order for him to get the same take-home pay (net after taxes) as the lower offer he took in FL. CA has lots of other taxes besides the income tax, and that's why some businesses are leaving CA for other states such as TX and AZ. California businesses are not boycotting Arizona; they've voting with their feet and moving there.

Since he got called out on the hypocrisy of his not paying the MA "sails" taxes (sales & annual excise taxes) on his little $7M dinghy, John Kerry has said he would pony up the taxes even though he's not obligated to inasmuch as the boat is berthed in RI. Not out of the goodness of his heart, mind you, but as a simple matter that a scandal over his hypocrisy would be bad news for Democrats in November and for him personally should he seek reelection in 2014.

Whether longtime, incumbent politicians may be corrupt tax dodgers is left as an exercise for the reader. (Charles Rangell, the example currenty in the news, is only one data point. One swallow does not a spring make.)

What makes Kerry's behavior is not that he's doing what most people do to avoid taxes; it's the rank hypocrisy of his advocating for mammoth programs that raise taxes while at the same time he finds ways of not paying his own taxes. It's like Al Gore jetting all over the globe in his private plane and his using as much electricity for his house as a small town and then telling us we need cap and tax, and that we must reduce our carbon footprints.

Always a big picture kind of guy, Jeff Jacoby doesn't call Kerry a hypocrite or celebrate his being browbeaten into paying the taxes he would have been liable for if the boat were registered in MA.

Jacoby notes that Kerry had acted in his rational self-interest and quotes some of of Justice Learned Hand's opinions in support of people doing what they can to minimize their tax liability. He sees the affair as a teachable moment that was missed, a lost opportunity.

...What was the point of browbeating Kerry into paying higher taxes? Or rubbing his nose in his own history of laments about “tax-cuts-for-the-rich’’ and how “abusing offshore tax loopholes is wrong’’? It would have been far better to seize the moment to make Kerry see that by arranging to enjoy his yacht without paying the Bay State’s onerous taxes, he was acting not badly or selfishly, but rationally. Maybe Kerry could finally have absorbed the fundamental economic reality that human beings respond to incentives — and when taxes are too high, taxpayers and their money have an incentive to go elsewhere. Even fabulously rich taxpayers like Kerry and his wife.

Enticing as it can be to think otherwise, reality isn’t optional. Tax something less, and you get more of it; tax something more and you get less of it. People will always find ways to minimize their tax bill, and it is absurd to expect anything else.

This isn’t just about yachts and boatyards. If Congress allows the Bush-era tax cuts to expire at the end of 2010, tens of millions of Americans will change their economic behavior to avoid giving up more of their income to the government. Some will respond by working fewer hours, others by not expanding their business, or by looking for ways to shelter their income, or by moving to someplace where taxes aren’t so high. Few of us are zillionaires with teak-paneled yachts, but most of us become less productive when productive work is taxed more steeply.

See Keelhauling Kerry. (Also in today's Globe: Going overboard: Kerry was right the first time — dodging yacht tax was rational)

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