Yacht-tax loophole stays open

Assembly Republicans voted down a bill today which would’ve closed a tax loophole letting those who buy yachts and aircraft avoid paying California taxes.

The Assembly voted 47-18 for SBX3-8, but because tax matters require a two-thirds vote for passage, it failed. All Assembly Democrats voted for it, while 18 Republicans voted against it and 13 more Republicans failed to vote on it despite being present at the State Capitol today.

The bill would extend from 90 days to a full year the amount of time a new yacht or aircraft bought out of state must be stored outside California in order to avoid the state’s sales and use tax. Closing the loophole would bring in an estimated $5 million this year and $21 million next year.

Some might say that’s chump change, and in the context of the state’s $146 billion budget, it’s hard to argue. But critics would argue that while payments to schools are delayed, MediCal provider reimbursements are slashed, welfare cost-of-living increases are postponed, judicial vacancies go unfilled and far more draconian measures are considered to close the state’s enormous budget deficit, why would a fiscal conservative vote to maintain ANY tax loophole for ANYBODY? It’s not about the dollar amount, it’s about the philosophy, about the message it sends to the state.

“We have just had to make serious cuts in health care and education to keep the state solvent,” Assembly Speaker Fabian Núñez, D-Los Angeles, says in his news release. “For Assembly Republicans to then turn around and cover up for wealthy yacht owners who hide their boats so they’ll pay less tax is nothing short of reckless and callous. The fact that even some Republicans who had previously supported this measure didn’t vote for it today is particularly troubling. Instead of closing ranks Republicans should be closing the yacht loophole. Be assured this matter is not finished: closing the ‘sloophole’ will be the top item I bring up in every budget discussion before any further cuts are to be considered.”

The 18 Assembly Republicans who voted against closing the loophole are Joel Anderson, R-La Mesa; John Benoit, R-Palm Desert; Tom Berryhill, R-Modesto; Mike Duvall, R-Brea; Ted Gaines, R-Roseville; Martin Garrick, R-Carlsbad; Guy Houston, R-San Ramon; Bob Huff, R-Diamond Bar; Kevin Jeffries, R-Riverside; Rick Keene, R-Chico; Doug LaMalfa, R-Biggs; Bill Maze, R-Visalia; George Plescia, R-San Diego; Jim Silva, R-Huntington Beach; Cameron Smyth, R-Santa Clarita; Todd Spitzer, R-Orange; Audra Strickland, R-Camarillo; and Mimi Walters, R-Laguna Niguel.

And the 13 Assembly Republicans who Nunez said didn’t vote on the bill despite being in the State Capitol on Tuesday are Republican Leader Mike Villines, R-Clovis; Anthony Adams, R-Hesperia; Greg Aghazarian, R-Stockton; Sam Blakeslee, R-San Luis Obispo; Paul Cook, R-Yucaipa; Chuck DeVore, R-Irvine; Bill Emmerson, R-Redlands; Jean Fuller, R-Bakersfield; Shirley Horton, R-San Diego; Alan Nakanishi, R-Lodi; Roger Niello, R-Sacramento; Sharon Runner, R-Lancaster; and Van Tran, R-Costa Mesa.

Josh Richman

Josh Richman covers state and national politics for the Bay Area News Group. A New York City native, he earned a bachelor’s degree in journalism from the University of Missouri and reported for the Express-Times of Easton, Pa. for five years before coming to the Oakland Tribune and ANG Newspapers in 1997. He is a frequent guest on KQED Channel 9’s “This Week in Northern California;” a proud father; an Eagle Scout; a somewhat skilled player of low-stakes poker; a rather good cook; a firm believer in the use of semicolons; and an unabashed political junkie who will never, EVER seek elected office.

  • Progressive Democrat

    There are some rural counties in California that might not exist next year without a mil or two the State has promised them but is not proposing to delay payments. There are no longer any extra monies because of years of the state cutting monies to counties to the bones while mandating services. I read the comments of one CAO for one California county who stated that people should start deciding where they want to move to. This county is owed $400,000 from the state for social services that are mandated and rendered but the state still hasn’t delivered.
    One or even two million can be literally both a life and death matter both for county government and a life and death matter for their residents without services. To conclude, $2l mil or even $5 mil is not chump change. Neither is the $35 million we are spending on Arnold for security. It’s time for the state of California to make the same economies it is forcing on county and city governments. But more importantly as you note Josh it’s time to close all the loopholes benefiting the wealthy and affluent. Closing these loopholes will not kill or maim anyone. Counties going out of business and not being able to deliver services will. The old shibboleth that everyone tightens their belts is untrue. some people’s stomachs are stretched out so far they cannot even get a belt around them barely.

  • jojo ba

    if you buy something out of state, you should never have to pay taxes on it in California. That should include cars too. Not sure why people are making a fuss about it. If I ever get enough money that I want to spend it on a yacht, why should I have to pay sales tax in two states? If the state I buy in doesn’t have sales tax, then I shouldn’t have to pay. This should apply to all goods. It is only fair.

    The weird assumption is that if you are buying a yacht, you must be rich and therefore you must be punished with extra taxes. What if you have saved all your life on lower-middle-class income to buy that yacht?

    Besides that, who cares what Arnold does? Any publicity is good publicity, remember that, if you don’t like the governator, don’t talk about him, it only helps him.

    Me, I’m a (generally) liberal democrat who voted for Arnold because he isn’t boring. Sometimes you need to elect a freak like Jesse Ventura.

    Of course I’ve paid for it, everyone I know gives me hell for voting for him.

    – jojo

  • Mike

    The idea that the state will get these phantom “millions” just because they extend the time is ridiculous. The yachts are only brought into the state because the 90 days have passed. If the gang in Sacramento extends the “loophole” time to a year, yacht owners will just berth the yachts elsewhere for another 275 days, and still not pay California’s extortion. Extend the time indefinitely, and the yachts will never be berthed in California – and it’ll give the yacht owners more incentive to actually move elsewhere, taking their income tax payments to California with them.

    There is no iron curtain at the Siskiyou Pass, as much as the gang in Sacramento would love to build one.