Maryland weighs adding luxury tax on boats

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Maryland lawmakers are considering a bill that would impose a 1 percent “luxury surcharge” on certain items, including boats costing more than $35,000.

The bill also would tax cars, motorcycles and planes costing more than that amount.

The tax on motor vehicles, boats, and airplanes sold for a taxable price of more than $90,000 would be $550, plus 2 percent of the amount above $90,000.

The bill, which would impose a luxury tax on most retail sales of items valued above $5,000, was introduced last month in the House of Delegates. It was referred to the Rules and Executive Nominations Committee.

If passed, the bill will take effect July 1.

According to a petition against the proposal on Change.org, the bill would “effectively force boaters and would-be buyers of boats to seek another venue in which to enjoy, keep and purchase their boats to avoid these surcharges.

“Nearby Virginia and Delaware will benefit, while Maryland yacht brokers, dealers, boatyards, marinas and peripheral marine businesses will be negatively impacted or forced out of business,” the petition states.

Comments

28 comments on “Maryland weighs adding luxury tax on boats

  1. Kevin Ralph

    When will the politicians learn?! No one needs a boat, the market for which has struggled for the last 3 years. I agree with the sentiments of Change.org, being highly mobile, boat owners who do buy will simply purchase/dock elsewhere, while those in the margins just won’t buy – I guess the current crop of politicos weren’t around for the wonderful failure of the Federal “Luxury tax” in the early 2000′s that helped decimate the industry!?

  2. Areyou kidding

    Were these Maryland lawmakers born after the failed federal luxury tax? Do they not understand that any new taxes come out of the economy and not from under mattresses.

  3. Bill Full

    In the early nineties the Feds came up with the 10% luxury tax on $100K plus boats. As we all recall it did wonders for the industry and ultimately the Congressional Budget Office did a study that proved it COST the government money as people largely would not buy boats above that number.

    While less pernurious I am certain that clipping thier tax payers an extra 1% will not help the industry in the state and will likewise result the the state ending up with LESS money in thier coffers not more.

  4. Gregg Burdick

    What is stated in the Petition mentioned is so obvious one wonders why the Maryland lawmakers don’t understand (or seem to care). “Static analysis rather than Comprehensive analysis”. The domano effect will have an adverse effect on much of the working population of Maryland.

  5. Sandy Wills

    Astonishing!!!

    Are all politicians genetically incapable of learning from history? Can they not reasonably anticipate the devistation of an already fragile boating industry with no realistic expectation of noticeable increases in tax revenue?

    They have a classic example for reference. Just look to the federal government’s failed (and repealed) Luxury Tax of 1991 and all the fatal and near-fatal damage that it did in all segments of the marine trades industry.

    Even the “esteemed” Senator Kerry famously illustrated the lengths to which buyers will go to avoid (legally or otherwise) taxes that they perceive to be inequitable, onerous, and ill-conceived.

    A better solution, to which all business professionals subscribe, would be to attack inefficiencies, “services” duplication, and general waste of the tax revenues they already have. They need to start doing that instead of always looking for additional revenue sources to help perpetuate their mismanagement, inefficiencies, and outright failures.

  6. DD

    We continue to add taxes not cut expenses, if the Law makers cut their extravagant life style by 1%, or stopped the Bookmarking to help the friend that then helps them there would be no issue

  7. Jim Bower

    Stupid politicians! Here we go again. Taxes steal money from people. The same people who would be purchasing gooods and sevices that make our economy work. How can we reconstruct our economy if we have stupid politicians who destroy it before it is even standing on two legs.

    Does anyone remember what happened with the 10% luxury tax??????

  8. Rick Dieterich

    We are currently the only state in the union to have luxury tax. It’s killing us. To you folks in Maryland… I highly recommend fighting this tooth and nail!

    CUT SPENDING/STOP SPENDING!

    Rick Dieterich
    Springline Yacht Sales

  9. bill gardella

    Another shameful, revenue-negative attempt to buy votes, a la Mr. Obama’s class warfare ruse. How embarrassing. And yes, of course Virginia and Delaware are rooting for the stupidity of Maryland’s legislature to pass this!

  10. George Roberts

    i have been in the houseboat business for 27 years and as i recall a similar tax was implemented in the late 1980′s or early 90′s. it was detremental to the houseboat industry, and more so to the large cruiser / motoryacht industry. buyers who would trade up every few years decided to keep their boats longer, so boat builders lost orders, employees lost jobs and did not pay tax on lost income. it was a lose, lose, situation for everyone, not only boat builders, employees, tax base etc. a lot of those buyers could probably afford the the proposal idicates tax on cars, boats, airplanes, and motorcycles.
    you can buy a nice motorcycle for 35k, but how many cars are on the market that cost less than 35k, not too mention boats and airplanes.
    the government has shot their self in the foot once, and now they want to do it again?

  11. Glenn McCarthy

    Here’s what I sent, feel free to copy and paste it, no copyright on this one friends –

    sheila.hixson.annapolis@house.state.md.us
    sheila.hixson@house.state.md.us
    heather.mizeur@house.state.md.us

    Dear Delegate Hixon & Mizeur:

    Please consider that when the housing crisis began in the U.S. a few years ago while the U.S. went into a recession with 9% – 12 % unemployment, the “recreational marine industry” had 75% unemployment. The citizens did consider recreational boats an extra they could do without and did. The industry has not recovered yet but has had gains as the rest of the economy has had.

    Additionally in 1991, the U.S. Congress applied a luxury tax on boats. This tax decimated the industry. It led to many boat manufacturers going bankrupt and once it was repealed (after damaging this part of the economy horribly causing many job losses), Congress repealed it once the damage was done. As many U.S. manufacturers were gone, foreign built boats flooded the U.S. afterwards leaving the U.S. boat building industry weaker.

    Sure it “may” make sense to “tax the rich” but what occurs in reality is those employees who build the boats lose their jobs, the component manufacturer employees lose their jobs and the rich hold onto their money not wanting to give any government a bigger share. By the way, used boat prices are incredibly depressed, it is a buyers market (just as in housing) and a savvy buyer would be better off buying a cherry used boat at dimes on the dollar rather than a new boat exacerbating shutting down more assembly line jobs.

    As you know “History repeats itself” and you should look deeply into the prior efforts of a luxury tax and fully understand the consequences you are proposing.

    Sincerely,
    Glenn McCarthy

  12. Lenard Lee, President NCMA

    The federal government went down this road before and the result to our industry was a disaster. Will the politicians never learn that you can not tax your way to prosperity.

  13. Joe

    Let me guess, a democrat came up with this idea… Maybe a little research before hand, this failed before!

  14. Wendy

    This is unbelievable. What a great way to put many folks (including me) out of a job! Please, follow the link, sign the petition, and share with as many people as possible.

  15. Brian Commette

    As a resident of a Northeast state that does not tax boating but has a few empty slips and moorings, I applaud the Maryland legislature for their innovative thinking and presence of mind. Just send those boats to RI. We even have wind in the summer.

  16. ItzDon

    Maybe a Maryland Representative could pick up the phone and call Connecticut to see how well the Luxury Tax is being rec’d in their state. Nothing but another road block by government to literally kill business. It does nothing but curb spending as those in a position to buy, simply won’t as it doesn’t hurt them one bit…..but it kills those servicing the industry. By the way, that is not speculation, it’s been tried before and the results were catastrophic. Nothing happens in this world until someone sells something……why does government continually try to do something they can’t…..like run a business.

  17. Scott F. (Seattle, WA)

    So much for the “Recovery Effort!” When are these idiot politicians ever going to learn?? Back in ’91 when the fed’s then had the grand idea to impose a 10% luxury tax on new boats over $100k, new cars over $38k, and new private aircraft….it literally destroyed those industries for years, put thousands of people out-of-work, and caused many boatbuilders to shut-down and close forever. Then, a few years later a federal report concluded less than $24 million of tax revenue was generated overall, and it cost over $30 million to administer the program.

  18. Henry D

    The stupidity of this tax is not isolated to the state level. The Frank-Dodd Act was aimed at reforming the real estate market but as a byproduct, also has the marine industry scared of making boat loans to anyone who wants to own a boat and live on it. On the fear that the loan would not be paid, and the lending institution can not repo the boat. At the Annapolis and Miami Boat show, none of the lenders were accepting loans if the borrower wished to live on the boat.

    Congress does not have a clue either.

  19. Curtis

    Remember to vote in November
    If the current goverment is re-elected watch out because it will only get worse. Government does not know how to make cuts, only increases in spending which is why we are in this mess.
    Get out and vote, if you don’t you can only blame yourself.
    Have a nice day

  20. Captain Crabcakes

    Politicians looking for another way to fund their eventual lifetime pensions we cannott afford. In the meantime all of us independent business owners shoulder the burden, and the labor force that builds the boats and component parts will be on the unemployment line exacerbating the problem further.The industry will dry up, and they’ll wonder where all the sales tax revenue went. What a bunch of idiots!.

  21. taxpro

    I am so tired of hearing of taxing the rich. The under $10,000 unwed mother of three pays no income tax at all and gets a refund from the IRS of approx. $5,000 plus Food Stamps of about $500.00 per mo, housing assistance of up to $800.00 per mo and the State pays approx $3,000 per year for daycare for each child. An unmarried or married couple making $20,000 with two children pay no income tax and get a refund from the IRS of approx $7,800 plus Food Stamps, and daycare assistance.

    It’s about time we stopped subsidizing these people who do not work and do not want to work. Have more babies, married or not, and you get more money from the Government.

    The Government gives away billions annually to the “poor”, aka lazy.

  22. Todd Taylor

    History repeats itself and if passed this luxury tax will negatively effect our industry, businesses and jobs to the extent that it will ultimately cost the state in lost revenue. WHEN WILL THESE PEOPLE LEARN !!!
    If Maryland wants increased revenue in their coffers, they need to eliminate their tax on boats all together and reap the benefit of more business, more jobs and a healthier industry. Maybe a representative from Rhode Island should come down here and explain how it’s done….or maybe we’ll all move to RI!!

  23. Ruthless

    Am I correct that MD already charges you 5% excise tax on boat being docked in Md for more than 90 days on the full purchase price of the boat? Is this in addition to that???

  24. dave harrison

    Over the years I could compete against other dealers and other product. The only one I could not beat, is my own damn government.

  25. ronnie babin

    Take a clue from FL. We now have a no nonsense businessman as Governor. A couple of years ago FL passed a sales tax cap that is correct a CAP on the sale of “luxury” items of $18,000. Here in Broward County our sales tax rate is 6%. If you buy a $300,000 boat you pay $18,000 sales tax. If you buy a $10,000,000 boat you pay $18,000 sales tax. Guess what? Sales tax revenues on luxury items are up last I read about 500%. All the folks flocking to the Bahamas and the islands are buying and registering in FL.

  26. pappy

    The socialist running the government in Maryland will not be satisfied until we are all riding bikes, wearing manderin colors and have no diversity in our lives.

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