BOSTON—Massachusetts Sen. John Kerry is docking his family's new $7 million yacht in neighboring Rhode Island, allowing him to avoid paying roughly $500,000 in taxes to his cash-strapped home state.
If the Isabel were kept at the 2004 Democratic presidential nominee's summer vacation home on Nantucket or in Boston Harbor near his city residence, he would be liable for $437,500 in one-time sales tax. He would also have to pay $70,000 in annual excise taxes.
Rhode Island repealed those taxes in 1993. That has made the state something of a nautical tax haven.
Kerry spokesman David Wade said Friday the boat is being kept at Newport Shipyard not to evade taxes, but "for long-term maintenance, upkeep and charter purposes."
Wade noted the vessel was designed by Rhode Island boat designer Ted Fontaine and purchased in the state. It was built in New Zealand by Friendship Yachts.
A Department of Revenue spokesman said Kerry would be liable for Massachusetts taxes if he berthed the boat in the Bay State within six months of its purchase. If the Isabel were brought to Massachusetts after that period, the state would have to decide if it wanted to pursue the taxes.
Massachusetts, like most other states, has been grappling with plunging tax revenues. Last year's budget deficit was $600 million, and officials are bracing for a $1 billion deficit this year.
Gov. Deval Patrick, visiting Massachusetts National Guard troops in Afghanistan, said he had not read the local papers and had no comment. Rep. Karyn Polito, a Shrewsbury Republican running for state treasurer, said the Revenue Department should investigate whether Kerry was committing tax evasion.
The Massachusetts Republican Party also criticized Kerry.
"While we can fault the senator for his hypocrisy on taxes or having his boat built halfway around the world instead of here in the USA, John Kerry proves an important point that taxes in Massachusetts are too high. If they are too high for someone as rich as Senator Kerry, they are absolutely too high for working-class taxpayers who are being squeezed at every turn," said a statement issued by party Chairwoman Jennifer Nassour.
The 76-foot sloop has two cabins, a pilot house fitted with a wet bar and cold wine storage, according to the Boston Herald, which first reported its Rhode Island berthing. It derives its moniker from the middle name of Kerry's mother and the name his wife, Teresa Heinz, hoped to give a daughter.
Instead, she had three sons.
Coast Guard registration records show the vessel is owned by Great Point LLC, a limited liability corporation based in Pittsburgh,