YOU ARE HERE: LAT HomeCollections

New Luxury Tax on Boats May Cost the Rich Some Money, but It Costs Workers Their Jobs

January 06, 1991

I have been in the boat business since 1972. The luxury tax in general is unfair but grossly so as it pertains to boats, "Costly Cars Sell; Yachts Just Bob at Dock" (Dec. 12). My industry is in the process of being crushed by this tax. It translates into lost jobs for thousands of workers if something is not done quickly.

The luxury tax on new boats is a cruel hoax played on the public at the expense of those who work in the industry. The U.S. boat industry and the 600,000 workers employed directly in manufacturing were served up as sacrificial lambs to appease those who insisted on "soaking the rich" during the federal budget negotiations.

The truth is that the Treasury Department has acknowledged that the 10% luxury tax on boats will not produce tax revenue to help solve the budget crisis. The luxury tax revenue will not even cover income tax revenue lost as a result of unemployed workers and bankrupt manufacturers.

The reasoning seems to be that the rich can afford it and an extra 10% tax isn't going to stop "fat cats" from indulging themselves.

Since the luxury tax went into effect for newly ordered boats, nobody has bought a new boat on which the tax would apply! The National Marine Manufacturers' Assn., the trade group that tracks such things, hasn't found a single sale in the entire country. However, the NMMA has been able to document more than 100,000 layoffs (those are blue-collar workers--not fat cats) and numerous boat manufacturers going out of business.

A great number of people who buy boats are not rich; they plan to live on the boat in lieu of a house. A significant number who buy boats that cost more than $100,000 do live on board. Should they be penalized for such a lifestyle?

Why is a new boat a luxury but a used boat is not? Why is a new boat that costs more than $100,000 a luxury when a $500,000 vacation home in Aspen is not?

The fact is that all excise taxes are regressive by nature. The politicians tell us they are soaking the rich, but it is the average worker who suffers the most. Don't be fooled by all the political posturing. The real fat cats are in Washington piloting a ship that's sinking as the direct result of their 20-year spending binge.

The luxury tax on boats should be repealed. Our government representatives should balance the budget by cutting their spending, not by increasing our taxes.


The writer is one of the owners of P-A-E Yacht Builders in Dana Point.

Los Angeles Times Articles