Sen. John Kerry skips town on sails tax
posted at 7/23/2010 11:44 AM EDT
Sen. John Kerry, who has repeatedly voted to raise taxes while in Congress, dodged a whopping six-figure state tax bill on his new multimillion-dollar yacht by mooring her in Newport, R.I.
Isabel - Kerry’s luxe, 76-foot New Zealand-built Friendship sloop with an Edwardian-style, glossy varnished teak interior, two VIP main cabins and a pilothouse fitted with a wet bar and cold wine storage - was designed by Rhode Island boat designer Ted Fontaine.
But instead of berthing the vessel in Nantucket, where the senator summers with the missus, Teresa Heinz, Isabel’s hailing port is listed as “Newport” on her stern.
Could the reason be that the Ocean State repealed its Boat Sales and Use Tax back in 1993, making the tiny state to the south a haven - like the Cayman Islands, Bermuda and Nassau - for tax-skirting luxury yacht owners?
Cash-strapped Massachusetts still collects a 6.25 percent sales tax and an annual excise tax on yachts. Sources say Isabel sold for something in the neighborhood of $7 million, meaning Kerry saved approximately $437,500 in sales tax and an annual excise tax of about $70,000.
The senior senator’s chief of staff David Wade denied the old salt was berthing his boat out of state to avoid ponying up to the commonwealth.
“The boat was designed by and purchased from a company in Rhode Island, and it’s based in Newport at the Newport Shipyard for long-term maintenance, upkeep and charter purposes, not tax reasons,” Wade told the Track.
And state Department of Revenue spokesguy Bob Bliss confirmed the senator “is under no obligation to pay the commonwealth sales tax.”
But back in 2006, then-gubernatorial candidate Christy Mihos took some flack for avoiding some $23,000 in Bay State sales tax and $1,320 in local excise taxes by berthing his motor yacht in Rhode Island. But Mihos paid just $475,000 for his 36-foot vessel Ashley and readily admitted that he used the boat at his West Yarmouth summer home.
However, according to Bliss, if Kerry berths the Isabel in Massachusetts waters within six months of purchasing the boat, there’s a “presumption of use” and the Heinz-Kerrys would have to walk the plank and pony up to the Bay State. After six months, should the boat change its berth to, say, Nantucket, then it’s up to the state to go after them for the taxes, Bliss added.
Yesterday, the Isabel, which lists Great Point LLC of Pittsburgh, Penn., as its owner, was getting a spruce-up at the Hinckley shipyard in Portsmouth, R.I. Sources say the senior senator is demanding that some warranty work be done.
Fontaine, a protege of legendary sailboat designer Ted Hood, was tight-lipped about the owners of Isabel but he did confirm the boat was built in New Zealand. According to Internet reports, Kerry was seen in Whangarei last December inspecting his new high-seas plaything.
Maybe the berthing in Newport has nothing to do with dodging (legally) the Mass sales and annual excise taxes, maybe it’s just a happy coincidence… BUT – the luxury sloop was built in New Zealand, in a time when American shipbuilders are strapped for business. It would have been more than a nice gesture for Kerry to spend his wife’s dough in America, where jobs are needed, and berthed the thing at his summer home in Nantucket, so the cash strapped Massachusetts could get a little boost.
For sure the financial difference to the Kerry’s overall massive wealth would have been imperceptible, however the positive PR would have been priceless, and a possible patriotic precedent setter.