Taxes Are for Fools

By Duru

June 12, 2004


This is another one of those moments that exposes my political, social, and cultural biases. I read an article in the SF Chronicle on June 11, 2004 (Dems seek to tighten 'yacht tax loophole' - Lynda Gledhill, Chronicle Sacramento Bureau) describing how rich folks use a convenient loophole in the California tax code to avoid paying taxes on yachts. Apparently, the Democrats are trying to close the loophole and regain the revenues, but the Republicans are protesting. Now mind you, I feel for the tax-evaders, and I am not hating. I once tried to figure out how I could avoid paying sales taxes on a new car by purchasing it in Oregon where sales taxes are extinct. No matter how hard I thought and researched, I found that the law had a lock on tight on my sales tax dollars! It was during this time that I learned just how tax evasion is considered a very serious offense. Fortunately, I did not trust an unscrupulous car dealer at his word and did my homework.

So, imagine my surprise to find out that some clever lawmaker about 40 years ago hooked up the yacht industry by encouraging folks to buy right here in "tax free" California. The loophole is not overly elaborate but it is still brazen and bold for its blatant disregard for paying one's fair share. It is described as "In some boating circles it's called the '90-day yacht club.' A boat buyer and seller sail five miles off the California coast into international waters where they seal their deal. The boat is then piloted to a dock outside the state, usually in Mexico, and left there for 90 days before it is brought back to California without the new owner having to pay sales tax." Wow - why can't I enjoy the same kind of consideration for my non-luxury purchases?!

I wish the law would just be honest and grant yachts a permanent tax holiday. This way, it would be clear to people where the priorities of its government rest. At a time where the state is buckling under tremendous budgetary pressures, borrowing to its eyeballs just to meet the bare essentials of maintaining a civil society, and cutting the funding of almost anything and everything that cannot scurry out of the way, I find it "offensive" {Sen. Wes Chesbro, D-Arcata (Humboldt County)} to read and hear that Republicans are doing what they can to keep this loophole wide open. The good Governor himself is afraid that closing an ill-gotten loophole amounts to a tax increase. What?!? This is a tax correction! How long will we continue to kid ourselves that we can leverage the future for free? To me, this insult to patriotic taxpayers is an excellent commentary on the ethos of a society (government?) that worships its rich and caters to their needs often to the exclusion and harm of the truly needy.

The excuse we hear is that without this tax break, yacht buyers will purchase in other states: "Republican lawmakers and the Schwarzenegger administration are balking. They say forcing boat owners to pay sales tax after leaving their vessels outside the state for three months is actually a tax increase that will drive big purchasers out of California and hurt the economy." Skip Daum, lobbyist for the California Recreational Vehicle Dealers Association, says, "If this budget appropriation goes through, people will not only buy elsewhere, they will get service and buy parts elsewhere…We're not collecting the sales tax, and then we also suffer the indignity of not having the vehicles worked on in California. We lose all the revenue." These are excellent capitalist arguments, but tragic ones. It says that whenever high-end capital and commerce is fluid and free to operate elsewhere, our government bodies will bend over backwards to curry favor and pray for trickle-down effects in lieu of direct tax revenues. Note again that I could not figure out a way of sneaking my car purchase through a similar loophole! Well, congratulations to those working in the California yacht industry: you won't have to set-up shop in some other state to do business. Please note that Cali eagerly awaits your now voluntary contributions to keep this Titanic afloat!

Are taxes just for fools? Are taxes just for the people who cannot pay off their legislators or for those who cannot otherwise cajole their representatives to cut them a deal? Are taxes really such a sin against our pursuit of liberty, peace, and happiness? Certainly when the entire country is supposed to be at war and a time of sacrifice, it is not too much to ask people to pay their fair share? Needless to say, I was so disappointed, dispirited, and indignant after reading this article. Thank you for allowing me to vent…


Ó DrDuru, 2004