The public didn’t know until after the New York State budget was passed – but Albany’s newly approved spending plan includes special tax breaks for expensive yachts and private planes.
The budget eliminates sales tax on the cost of a yacht above $230,000. For the purchase of a private plane carrying fewer than 20 people, there’s an even better deal: the sales tax is completely eliminated. “The exemptions come after state lawmakers did not include a hike in the state’s minimum wage,” noted NY1 reporter Nick Reisman.
“It’s completely unjust that, while the legislators aren’t giving workers like me a raise, they’re giving this benefit to millionaires and billionaires for their yachts,” Manuel Melendez, a Brooklyn restaurant worker who earns minimum wage, told the Daily News. “It shows that our government is working for the wealthy and not for me,” said Melendez, who belongs to the community group Make the Road New York.
Luxury Tax Breaks
Senate Finance Committee Chairman John DeFrancisco (R-Syracuse) defended the luxury tax reductions, telling reporters that since poor people already get a federal tax credit if they are sufficiently low-income, it is only fair that rich people get some tax breaks, too. “I think it’s been misrepresented that people are living on just the minimum wage because they’re getting huge – in my mind, in relation to the amount of income they’re earning – huge credits,” DeFrancisco said. “Those are tax credits, too. Just like for the airplanes and the ones you mentioned before. Tax credits for the poor.”
The yacht and private-jet tax exemptions were added to the budget in the final stages of budget talks, with zero public discussion. They were first brought to light by the Fiscal Policy Institute (FPI), which was reading the fine print in the budget deal the day after agreement was reached. “We were simply looking for things like property tax relief for regular folks and we found the yacht exemption,” FPI head Ron Deutsch told The New York Times.
“The ironic part is that your average Joe in New York who wants to go out and buy a small 16-foot bass fishing boat for his own personal use will actually pay sales tax, but someone going out and buying a yacht isn’t going to be subject to the same tax,” Deutsch told Capital New York.
Supporters argued that tax breaks for people who buy yachts and private jets are measures that will help people rise out of poverty. “It creates jobs, it makes New York State competitive and that would afford jobs for people to make above the minimum wage,” said Senate Majority Leader Dean Skelos. “It’s about job creation.”
“We are trying to encourage people to buy their boat, to maintain their boat and use their boat in New York,” a Cuomo administration official told the Daily News. The official “added that many New Yorkers purchase planes in Connecticut because that state doesn’t tax such expenditures,” the Daily News reported.
Yoni Appelbaum, a senior editor at the Atlantic, put such arguments in a larger context. “America’s state tax laws are riddled with carve-outs and loopholes aimed at attracting or retaining businesses, or promoting economic growth,” Appelbaum wrote. “Each individual measure may seem compelling to the legislators who support it, but in aggregate, they produce an impossibly convoluted and regressive tax code. The top 1% of Americans pays only half as much of its income in state and local taxes as the bottom 20%. And governments end up starved for the very revenues these tax cuts are often aimed at securing.”