FRONT PAGE CONTRIBUTOR
Thank you, Senator Kerry. Thank you.
It’s rare when we Fiscal Conservatives have as clear a teachable moment as you gave us with your decision to berth the Isabel (pronounced “luxury yacht”) in Newport, RI, instead of Nantucket, MA, where you and Teresa maintain a “cottage”.
Again, we thank you.
And, while we’re at it, we’ll point out that you are a hypocrite of the first rank.
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Could the reason be that the Ocean State repealed its Boat Sales and Use Tax back in 1993, making the tiny state to the south a haven – like the Cayman Islands, Bermuda and Nassau – for tax-skirting luxury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 fiscal conservatives applaud your tax avoidance, not to be confused with tax evasion, which is a crime.
There’s nothing at all unethical or immoral about tax avoidance. It’s human nature. If I choose to take a state highway instead of a toll road, that’s my choice. In your case, you have wisely chosen to take delivery of the Isabel in RI to avoid your home state’s onerous sales taxes. You have chosen to berth it in Newport, at some inconvenience, because RI has chosen to become a tax haven of a sort; they are exploiting MA’s high tax regime precisely because it attracts the activity they want to attract, which in this case is berthing luxury yachts. They get to enjoy all the ancillary economic benefits that go along with supporting the leisure class.
I’ll quote a relevant factoid I picked up in this month’s American Spectator: the top 1% of the population (that includes you & Teresa) bear a larger tax burden than the bottom 95%. That’s progressive taxation for you. President Obama (and you, I’m sure), think our tax code should be even more “progressive” — the “rich” should pay even more.
But here’s where your hypocrisy comes in.
We fiscal conservatives are not jealous of the rich. Some of us aspire to be rich someday, too.
We think it’s wonderful that you choose to spend your hard-earned money (or, more precisely, the money that both you and Mrs. Kerry married in to). Although, in these hard-pressed times, wouldn’t an American yacht builder have been a better choice? Maybe we have already taxed those out of existence; I wouldn’t know, since I haven’t been yacht-shopping lately.
In comparing the burdens of the top 1% & the bottom 95%, we glossed over the 95 to 99 percent class. The top 1%, like you and Teresa, is the municipal bond class. You are interested in preserving, not risking, your nut. You’ve got so much dough that you can invest it in low-yielding tax-free or tax-advantaged investments, and still generate enough income to buy, say, a New Zealand-built luxury yacht.
The ultra-wealthy also have the means to hire legions of lawyers and accountants to help them avoid taxation if they think it’s excessive. They also maintain multiple domiciles and high mobility so they can switch assets around to take advantage of lower tax regimes, just as you did by berthing the Isabel in RI.
The 95 to 99 percenters, on the other hand, are mostly successful folks with middle class roots who’d like to achieve 1% status. You’d like to keep out the hoi polloi, and the progressive tax code helps do that by making the slope extremely steep for the 95 to 99 percenters.
The problem with all that is that the 95 to 99 percenters are the entrepreneur class and small business owners who create most of the jobs in a free-market economy.
The progressive tax code hurts you not a whit. It punishes the successful 95 to 99%ers, and it indirectly punishes the bottom 95% by hindering job creation.