Does Your Congressman Hate Sailing Industry Jobs?
Mike Quigley vs. Mortgage Interest Deduction
Mike Quigley vs. Mortgage Interest Deduction
I find this troubling, not only as an avid Lake Michigan sailor, but also as a real estate professional.
The same arguments in favor of home mortgage interest deduction apply to the boating industry, if not more- the boating industry represents the livelihood of many interconnected jobs in building, selling, maintaining and enjoying recreational boating.
View Illinois’s 5th Congressional District (CHI) in a larger map
The Illinois 5th Congressional District map appears to include Diversey Harbor, but not Belmont Harbor.
View Illinois’s 5th Congressional District (CHI) in a larger map
Quigley, Walz, Peters Introduce Bill to End Subsidies for Luxury Yachts
Tuesday, 03 May 2011 13:29WASHINGTON—Today, U.S. Representative Mike Quigley (IL-05), along with Reps. Tim Walz (MN-1) and Gary Peters (MI-9), introduced legislation to eliminate taxpayer subsidies for yachts. The Ending Taxpayer Subsidies for Yachts Act will amend a tax provision that allows boat owners to write off their mortgage interest payments if they classify their boats as second homes.
“There’s absolutely no reason why taxpayers should subsidize luxury yachts,” said Quigley. “As we work to address our budget challenges, closing this frivolous tax loophole is a no-brainer.”
“We’re going to have to make some hard decisions to tackle our national debt, but this isn’t one of them,” said Walz. “Closing this tax loophole restores the Mortgage Interest Deduction to its original purpose; helping middle class families realize the American Dream through homeownership.”
Currently, taxpayers are allowed to deduct mortgage interest for up to two homes from their tax returns. Yachts equipped with bedding, toilet facilities, and a kitchen qualify even if they aren’t used as a primary residence. The Ending Taxpayer Subsidies for Yachts Act would limit the tax deduction to only those who use their boats as a primary residence.
“We need to get the deficit under control, and that means simplifying the tax code and eliminating special interest tax giveaways like the Yacht Loophole,” added Peters. “Homeownership is part of the American Dream and we should encourage it, but yacht owners don’t need any special handouts, especially in the middle of a budget crisis.”
In 2004, there were approximately 500,000 pleasure boats in the United States large enough to qualify for the tax break, but only around 100,000 people live full time on boats according to the 2000 Census.
The proposal is included in Quigley’s Reinventing Government: The Federal Budget Part II. The report is due out next week and will include detailed cost-saving recommendations to follow up on Part I, which focused on transparency in the budget process.
Source: Mike Quigley press release
http://quigley.house.gov/index.php?option=com_content&view=article&id=480%3Aquigley-walz-peters-introduce-bill-to-end-subsidies-for-luxury-yachts&catid=19%3A2011-press-releases&Itemid=24
Note the discrepancy in the fake analysis? 2000 census figures are compared to 2004 boat statistics (without source reference). Never mind that we just completed a 2010 census, or that the current year is 2011…
Here’s how the media fabricates information:
The Hill directly copies information from the press release, publishing the unsourced numerical data as if it were factual news:
http://thehill.com/blogs/on-the-money/domestic-taxes/159065-house-lawmakers-urge-elimination-of-tax-subsidy-for-yachts
But The Hill is honest enough to inquire, and report:
The IRS doesn’t differentiate between mortgage types so there is no data available to calculate an exact amount of money the legislation would save, an aide told The Hill.
Nor is there any analysis of the jobs and positive economic impact of the original mortgage interest deduction as it currently exists with regard to boat ownership.
Perhaps Quigley and his over-taxing colleagues can examine the studies prepared for justifying the funding of additional harbors for Chicago?
Unfortunately, it seems they would rather perpetuate the false narrative that taxing more is the solution to the economic problems created by government over-spending.
6 Responses to “Does Your Congressman Hate Sailing Industry Jobs?
Mike Quigley vs. Mortgage Interest Deduction”
1 Gene Gooding 4 May 2011 @ 9:59 am
I guess the Congressman should not look for any donations from Brunswick Corp. in his back yard.
This is “Tax The Rich” that they always come forward with. The last time they tried this was The 10% Luxury Tax on Boats over $100,000. That move cost 57,000 jobs in the Marine Industry. Bad Law. The boaters just bought 1-2 year old boats.
2 Tax Breaks for Yachts Come Under Fire – The Wealth Report – WSJ 6 May 2011 @ 12:15 pm
[…] […]
3 J.W. 9 May 2011 @ 6:26 pm
So by that logic, we should let people claim the deduction on their planes as well, right? The same argument applies to that industry as well – it would be less taxes, and it would have a positive impact on jobs.
What about snowmobiles and jet skis? Lots of jobs there, with dealers, manufactures, mechanics, etc.
4 TL:DR 26 July 2011 @ 8:43 pm
TL:DR
BBBBAAAWWWWWW! I own a boat and I don’t want to pay takes on my property like everyone else! I own a boat and thus I am special!
The following statement below is a lie because the IRS does differentiate and will try to squeeze as much money out of you as possible:
“The IRS doesn’t differentiate between mortgage types so there is no data available to calculate an exact amount of money the legislation would save, an aide told The Hill.”
5 Jeff Erdmann 31 May 2013 @ 7:02 pm
Sound tax policy is not as salacious as a good political sound bite, but it makes more cents!
After reading your post I felt compelled to share Florida’s boat sales tax success story.
Prior to July 1, 2010 all boats sold in Florida were subject to a 6% sales tax since that date Florida capped the sales tax at $18,000 per transaction.
Florida’s Revenue Estimating Committee (similar to Washington’s CBO) said the measure would to “cost” taxpayers $1.5 million in lost revenue the first year alone.
Instead of the projected loss Florida collected nearly 10 times more tax dollars! This helped Florida’s $17.0 Billion dollar recreational marine industry and its 202,000 jobs. A Win – Win Tax policy that was touted as “Tax Break for the Rich Yacht Owners” turned out to be a huge windfall for Florida’s tax coffers.
Eliminating the mortgage interest deduction on boats / yachts is a politically good sound bite but does not hold water.
Under current law mortgage interest is deductible for both primary & 2nd homes with combined principal balances up to $1 million plus an optional $100k line of credit.
Qualifying 2nd home deduction includes: Homes – cabins – condos – town homes – RV’s – boats if they have a place to sleep cook & a toilet.
Repealing the entire 2nd home mortgage interest deduction could raise $8 billion per year, about 1/4 of one percent of the $3.034 trillion projected revenue for 2014.
If congress needs to eliminate the interest deduction on all 2nd homes the recreational marine industry would take its lumps along with the real estate industry and the RV industry. Singling out boats “a small drop in an $8 billion bucket” would not raise enough to justify scuttling more jobs in the already sinking recreational marine industry that currently employs about a million U.S. workers (that pay income taxes).
We should learn from successes like Florida’s sales tax cap & mistakes, like the 1990 luxury tax designed to soak the rich that backfired devastating the U.S. marine industry eliminating tens of thousands of U.S. jobs while raising only a few tenths of a million dollars in its first year. Adding salt to the wound the government paid unemployment benefits for the jobs lost.
6 Jeff Erdmann 31 May 2013 @ 7:02 pm
Sound tax policy is not as salacious as a good political sound bite, but makes more cents!
After reading your post I felt compelled to share Florida’s boat sales tax success story.
Prior to July 1, 2010 all boats sold in Florida were subject to a 6% sales tax since that date Florida capped the sales tax at $18,000 per transaction.
Florida’s Revenue Estimating Committee (similar to Washington’s CBO) said the measure would to “cost” taxpayers $1.5 million in lost revenue the first year alone.
Instead of the projected loss Florida collected nearly 10 times more tax dollars! This helped Florida’s $17.0 Billion dollar recreational marine industry and its 202,000 jobs. A Win – Win Tax policy that was touted as “Tax Break for the Rich Yacht Owners” turned out to be a huge windfall for Florida’s tax coffers.
Eliminating the mortgage interest deduction on boats / yachts is a politically good sound bite but does not hold water.
Under current law mortgage interest is deductible for both primary & 2nd homes with combined principal balances up to $1 million plus an optional $100k line of credit.
Qualifying 2nd home deduction includes: Homes – cabins – condos – town homes – RV’s – boats if they have a place to sleep cook & a toilet.
Repealing the entire 2nd home mortgage interest deduction could raise $8 billion per year, about 1/4 of one percent of the $3.034 trillion projected revenue for 2014.
If congress needs to eliminate the interest deduction on all 2nd homes the recreational marine industry would take its lumps along with the real estate industry and the RV industry. Singling out boats “a small drop in an $8 billion bucket” would not raise enough to justify scuttling more jobs in the already sinking recreational marine industry that currently employs about a million U.S. workers (that pay income taxes).
We should learn from successes like Florida’s sales tax cap & mistakes, like the 1990 luxury tax designed to soak the rich that backfired devastating the U.S. marine industry eliminating tens of thousands of U.S. jobs while raising only a few tenths of a million dollars in its first year. Adding salt to the wound the government paid unemployment benefits for the jobs lost.
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