Three congressmen have demonstrated their genuine lack of knowledge by introducing the Ending Taxpayer Subsidies for Yachts Act (H.R. 1702), which would eliminate the mortgage interest deduction on boats qualifying as second homes.
With this bill, representatives Mike Quigley (D-Ill.), Tim Walz (D-Minn.) and Gary Peters (D-Mich.) have become textbook examples of pandering.
As we work to address our budget challenges, closing this frivolous tax loophole is a no-brainer, Quigley says.
Well, to Quigley it may be frivolous and a no-brainer, but to the men and women whose livelihoods are building boats, the only no-brainer may be the congressmen!
As for Walz, his statement is equally revealing: Closing this tax loophole restores the mortgage interest deduction to its original purpose helping middle class families realize the American dream through home ownership.
Wow, that seems astute until, of course, one realizes its middle class families that go to work to build these boats to earn the money to pay for that home ownership. The deduction is an incentive to buy boats and keeps people working.
So does this bill make any real sense when it comes to budget reform? No. Its pure grandstanding. First, the bill would only eliminate the interest deduction when a boat qualifies under IRS rules as a second home. Notably, the bill doesnt touch the overall second-home mortgage deduction on anything else, ranging from second homes to RVs. Thats what makes this bill nothing more than a publicity grab.
Not convinced? Then how about the use of the term yacht. Why not just use the word boat? No, cant use boat because that doesnt create the right image of a rich mans toy.
Fact is, nobody even knows how much money might be involved. The IRS doesnt break down second mortgage deductions into categories like vacation homes, boats, RVs or whatever. But we do know the vast majority of boats that qualify for the deduction arent yachts. I suppose all three lawmakers dont realize that. More likely, they just dont care after all, they can still get the same publicity, so who needs facts.
Ironically, in January a bipartisan resolution was introduced in the House affirming the value and importance of the mortgage interest deduction. The resolution, H.Res. 25, states in part: Expressing the sense of the Congress that the current federal income tax deduction for interest paid on debt secured by a first or second home should not be further restricted. The resolution asserts that such deductions promote social and economic benefits as well as promoting security and stability.
The fact that these three congressmen all come from states with significant boatbuilding activities employing hundreds of workers makes their bone-headed bill even more unacceptable. That said, it is a bill, and Congress has been known to adopt bills that are dumber than this one. Its time to let them know this one should go nowhere.