Boat Tax Repeal

June 11, 1991

Tax law is not a rifle; it's a shotgun and a rather crude one at that. One of the latest examples is the 10 percent "luxury tax" the federal government has imposed on the price over $100,000 for boats and yachts. This was supposed to make the tax code more progressive -- to soak the rich and give a break to Middle America. Instead, it has been another body blow to an industry reeling from recession, and the major sufferers have been boat builders, boat distributors and their workers.

Mick Blackistone, executive director of the Marine Trades Association of Maryland, estimates that boat sales are off 60 percent in this state and employment is down 40 percent. About 50 businesses have gone under. He is trying to organize a nationwide campaign to repeal the boat tax, but rough waters lie ahead. Congress is reluctant to start making changes in last year's massive budget and tax agreement. Though it would have little trouble compensating for the relatively small revenues the boat tax is programmed to bring into the Treasury, the principle of avoiding any dismantling of the agreement is quite persuasive on Capitol Hill.

Among members of the Maryland delegation, Sen. Barbara Mikulski and Reps. Tom McMillen, Helen Delich Bentley and Wayne Gilchrest are supporting repeal; key holdouts are Sen. Paul Sarbanes and Rep. Benjamin Cardin. Ms. Mikulski was turned around after a 2 1/2 -hour meeting with Mr. Blackistone. He says she came to believe Congress had made a mistake and had damaged an industry important to the Maryland economy and lifestyle. Ms. Bentley, an advocate of tougher U.S. policies toward Japan, is of the opinion that luxury taxes were added to the budget agreement because of pressure by Tokyo on the Bush White House. As for Mr. Blackistone, he blames House Majority Leader Richard Gephardt, who wanted to tax the rich and failed to understand the full ramifications of the luxury boat tax.

Because the budget agreement is proving to be more efficient than expected in holding down federal spending, extreme care should be taken not to undermine its integrity. Nonetheless, no tax law ever quite works as intended. Flaws always need correction. If any move to make small corrections has even a fair chance of passage, repeal of the boat tax should surely receive consideration.

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