At issue is the state’s sales tax of about 8% — depending on the county — on most purchases, including vessels of all kinds. For most boat buyers, the tax is no more than a few thousand dollars. But for boats costing $400,000 and up, many financial advisor’s say it pays to avoid the sales tax altogether by taking advantage of the loophole in the law. Through it, buyers make their purchases offshore — and keep the boats out of state for 90 days. After that, they can bring their vessels back to California without paying the sales tax on new purchases.
Supporters of keeping the law as it is warn that any changes will have the same unintended consequences as a federal surcharge on luxury items signed into law in 1990. Many say the tax brought in less than half the amount projected and wound up costing much more than that in lost jobs.
“That was just a bigger version of what they are trying to do here,” Ackerman said.
Democrats don’t care if it works or not. The important think is to preen and posture. It was the Democrats that passed that luxury tax in 1990 and then had to sneak back to Washington D.C. to repeal it when the actual effects were seen. The important thing for them is to look good regardless of what actually happens.
I think the Republicans have an opportunity here. They can find out how many of the Hollywood Democrats have these yachts. I’m willing to bet that if Babs and others have yachts in this price range, they have taken advantage of the “loophole.”
Another would be to take them at their word on the tax revenue that would be raised and invite them to post a personal bond to provide that money if the actual tax collected falls short of what they promised.
I’d like to see how many takers they got for that.
And here’s another thought. I’m not one of those people who think up convoluted schemes for a living. God know, we have enough of those around. But what if some yacht owners or prospective yacht owners got together and formed a company in Oregon. One of those that works out of some law firms file cabinets. The firm would take delivery and own the yachts. They boats would then be leased back to their original owners for a nominal fee.
Have delivery taken by the company in Oregon, (no sales tax) and lease it for a dollar a year or whatever needs to be done to satisfy the tax man.
The people that buy these yachts have accountants to watch over their money. They’re not going to pay a dime more than they absolutely have to. No matter how many times they go to see Fahrenheit 911.