The yachting industry provides an extreme example of the harm to domestic producers.

Luxury yacht tax unintended results. Of course rich people dont have to buy a new 90-foot Broward So the federal government doesnt get the tax money and worse Broward doesnt sell its yacht and various boat builders get put out of work. As a result in its first year and a half the yacht tax raised a. President Bush in his budget proposals asked Congress to repeal the 10 percent luxury tax on yachts priced at more than 100000 and also on private planes that cost more than 250000.

Any changes would after all merely reflect the commercial reality of fleet rebates and run-out model payments in the eyes of the distributors and dealers as discounts to the underlying vehicle prices see for example the Federal Chamber of Automotive Industries submission to the Board of Taxation. Sales dropped 56 in the first month and got worse from there -- the larger tax package cooled the economy and contributed to a mini-recession 25000 workers in American Yacht Building lost their jobs 75000 more jobs were lost from companies supplying parts and materials to those yacht companies. Any new boat worth over 10000000 was to be taxed 10 of sale price.

Great Moments in Unintended Consequences Vol. Of course rich people dont have to buy a new 90-foot Broward So the federal government doesnt get the tax money and worse Broward doesnt sell its yacht and various boat builders get put out of work. If the new luxury tax on high-priced boats is not repealed boat builders will continue to lose their jobs and in the long run the federal government could lose revenue according to testimony.

The tax amounted to 10 percent of the cost of any new boats selling for more than 100000. What the politicos did not calculate in their equation were two small realities. The Treasury Department has acknowledged that the 10 percent luxury tax on boats will not produce tax revenues to help solve the budget crisis.

The additional 10 percent tax on yachts caused American boat builders to shutter operations and cut jobs as the rich either skipped out on yachts or bought them cheaper from overseas. Sanlorenzo SL78 - EM3 and get your personal offer from Marine Project Boat and Yacht Charter Agency. As a result in its first year and a half the yacht tax raised a pathetic 12655000 for the Treasury.

Austin Bragg and Meredith Bragg 292021 130 PM. A 1996 law phases out the luxury auto tax by 2002. Unfortunately the law of unintended consequences is real for the rich responded by buying less.