Luxury Tax Update: Take Action Now

Governor Paterson's proposed 5% tax on boat sales over $200,000 remains on the table, and if you're a NY state resident, now is the time to contact your state representative (see contact info below).

As I've written here before, this tax is only going to take money out of the state's coffers by discouraging yacht sales. That means less work for boat yards, less work for manufacturers, the list goes on. Here, courtesy of Howard McMichael, are six reasons why the tax is a bad idea:

1. The previous federal luxury tax in the early 1990s of 10% proved people stop buying boats when taxes drive the price beyond what they are willing to pay. It was repealed because it failed miserably.

2. When a buyer adds the luxury tax to the sales tax the effective tax is 12-13.6% depending upon where the buyer lives. Buyers will wait until it is repealed or simply invest their money in competing lifestyle experience.

3. The luxury tax will eliminate sales that would produce sales tax revenue causing sales tax revenue to decrease by more than the amount collected by a luxury tax producing a NET LOSS of taxes.

4. New boat owners spend more money maintaining and upgrading their boats than do people with old boats. This directly affects thousands of employees and hundreds of businesses in the marine service industry thru-out the state.

5. These same businesses have a vested interest in improving water quality for recreational boating and fishing. Investment in their infrastructure and water filtering will be curtailed due to lack of profits from boat sales.

6. Many new boat sales companies have 2007 and 2008 inventory in stock with bank loans running out. This inventory has caused large companies like Brunswick to curtail 2009 manufacturing. If existing inventory has an additional 5% added to the already distressed sale price the inventory will bankrupt many businesses. Sort of like telling General Motors you are taxing car sales to help them move product.

Find your State Assembly person quickly via zipcode:
http://assembly.state.ny.us/mem/

Assemblyman George Latimer (Westchester County):
LatimG@assembly.state.ny.us
518-455-4897 Albany office

Suzi Oppenheimer (37th Senate District)
oppenhei@senate.state.ny.us
(518)455-2031 Albany office