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Tuesday, July 27, 2010

Sen. Kerry Sails Around the Tax Issue

Kerry Following up on last week's post, Sen. John Kerry Skips Town on Sails Tax:

"Let's not get silly here." That was Senator John Kerry's response Friday to questions about his new $7 million yacht, Isabel, which last week was berthed in Rhode Island rather than in Mr. Kerry's home state of Massachusetts. In doing so, Mr. Kerry will save almost $500,000 a year in taxes. ...

[T]here's a smell of hypocrisy. In addition to sailing around the tax issue, Mr. Kerry chose to build his boat in New Zealand at a time when Bay State boat builders are having trouble keeping their work force employed. ...

It sounds like a perfect storm of political controversy for Mr. Kerry. The senator is the main sponsor of a bill that would squeeze U.S. lifestyles by cutting back on carbon emissions. At the same time, he has decided to treat himself to a new yacht, built overseas and carefully berthed outside the state he represents.

There are new details in the controversy over Sen. John Kerry's brand new boat. Kerry may still be on the hook for a half million dollars in excise taxes because he docked his yacht in Massachusetts less than six months after buying it.

Sen. John Kerry, hounded by questions over whether he is dodging state and local taxes on his ultra-luxe $7 million sailing yacht, yesterday slammed his car door on a pack of reporters demanding to know if he would pony up to the cash-strapped commonwealth.

Future of Capitalism, Explaining Kerry's Yacht-Tax Dodge:

If Great Point LLC is owned or controlled by Pennsylvania-based Teresa Heinz Kerry rather than by Massachusetts-based John Kerry, it may be that no Massachusetts use tax on the boat is owed.

And if you think mooring the yacht in Rhode Island rather than in Massachusetts is a tax dodge, the senator's spouse's decision to be a Pennsylvania resident rather than a Massachusetts one for tax purposes has its own advantages. The Massachusetts state income tax is 5.3%, while Pennsylvania's is 3.07%, according to the Tax Foundation. The Massachusetts estate tax is up to 16%, while the Pennsylvania inheritance tax maxes out at 4.5%. The lost income to Massachusetts as a result of Teresa Heinz Kerry's decision to be an official resident of Pennsylvania probably dwarfs the $500,000 or so at stake in the debate over where the yacht is moored.

(Hat Tip: Joshua Blank.)

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Comments

John Fund wrote in WSJ:

Let's not get silly here." That was Senator John Kerry's response Friday to questions about his new $7 million yacht, Isabel, which last week was berthed in Rhode Island rather than in Mr. Kerry's home state of Massachusetts. In doing so, Mr. Kerry will save almost $500,000 A YEAR in taxes. (EMPHASIS ADDED)

John Fund is one "journalist" that never lets the facts get in the way when he sets out to bash a Democrat.

Posted by: WD Kebschull | Jul 27, 2010 9:15:28 AM

WDK, what part of John Fund's quote did you find not accuate, and do you put quotes around references to CNN "reporters?" John Fund's quote was factual and is included on one of the video's provided.

And, Kerry also denied owning the yacht, when he said "That depends upon who owns it," which is splitting hairs that a legal entity owned by his family is not connected with him personally.

To get away from the journalists' questions, Kerry said to his driver, "Can I get out of here?" and took off in his gas-guzzling SUV which, surely, he doesn't want the rest of us driving in accordance with his fight against "global warming" and his quest for a carbon tax on the rest of us.

Posted by: Woody | Jul 27, 2010 11:54:52 AM

Makes you wonder what else "Great Point LLC" is sheltering for Kerry.

Posted by: Zogg | Jul 28, 2010 2:53:48 AM

On the boat, the sales and use taxes is a one time 500K. The MA property taxes are roughly 70K annually.

On the PA income taxes vs MA, the PA locals can assess a tax on top of the state rate. I moved from MA to PA for a job. The income taxes aren't much different in my locality (roughly 3.07% + 1.45% = 4.52% vs 5.3%). The real property taxes are a bit higher in PA, although you don't pay on personal property. Its a wash.

Posted by: Dave | Jul 28, 2010 6:28:34 AM

In John Fund's article, he says "Mr. Kerry will save almost $500,000 a year in taxes. ..."

But the original Boston Herald article said "Kerry saved approximately $437,500 in sales tax and an annual excise tax of about $70,000."

Where is the other $430,000 in annual state taxes that Mr. Fund thinks Kerry is avoiding?

And wasn't Ms. Heinz a PA resident before marrying Kerry? She was married in PA in 1966 and presumably wa a PA resident throughout that marriage, which ended in 1991. Is there a requirement somewhere that the wife's residence must follow the husband's?

Posted by: Michael | Jul 28, 2010 6:36:50 AM