Gone and hopefully not to be repeated

Great Lakes yacht broker RCR Yachts reflects on what happens when government policy and boating collide:

The decade of the 1990s began with the ill-conceived US Luxury Tax, which had unintended but unsurprising consequences. This “soak the rich” tax was doomed to fail from the start. When people feel they are being taxed unfairly, they find ways to circumvent or avoid it entirely.

People stopped buying vessels that were subject to the $100K+ taxable threshold, or they bought and kept them outside the US. The result was a crash of the domestic boating industry and the loss of many builders and suppliers to those builders, not to mention the jobs that disappeared.

The tiny amount of luxury tax generated was dwarfed by the loss of revenue from income, sales, and payroll taxes. Of course, the framers of the tax could have foreseen the results, but they were focused on garnering political points—the same scenario that played out in Canada over the past few years. Thankfully, both of these taxes are gone and hopefully not to be repeated.