Editorials RSS Feed
Print Story
E-mail StoryThis scam's just not fair
'It is not fair for some people to avoid paying the sales and use tax by purchasing expensive items, keeping them out of state for 90 days, and then bringing their purchase back into California.' Sen. Roy Ashburn
| Monday, Mar 31 2008 8:20 PM
Last Updated: Monday, Mar 31 2008 8:22 PM
Ask yourself: If Republicans won't vote to close the yacht-tax loophole, what will they be willing to do to help fix California's multibillion-dollar state budget mess?
Our readers recommend:
Loading Stories
In all fairness, let's separate Senate Republicans from their colleagues in the Assembly. Senate Republicans voted to end the tax avoidance scam. But not so Assembly Republicans, including our very own Assemblywoman Jean Fuller.
Here's how the scam works: Buyers of high-ticket yachts, recreational vehicles (we're talking big) and airplanes (like the ones Fuller and her husband have purchased over the years) can avoid paying sales tax if they take delivery in another state and don't bring them home for 90 days. The Legislature ended the scam in 2004, but Republican budget holdouts managed to restore it last year. About $26 million in taxes are lost to help fund vital services, such as public schools.
When closing the yacht loophole came before a committee earlier this year, Fuller voted to end it. However, she abstained when it came to a full Assembly vote. She told The Californian she saw the issue as another case of taxing businesses and the rich, when state spending should be cut instead.
To his credit, Kern's Republican Sen. Roy Ashburn saw the matter differently. He voted to close the loophole.
"Taxes must always be fair," he told The Californian. "It is not fair for some people to avoid paying the sales and use tax by purchasing expensive items, keeping them out of state for 90 days, and then bringing their purchase back into California.
"Most Californians cannot afford to purchase a yacht, motorhome or airplane. For most people, the big purchase is of a necessity, like a washing machine, refrigerator or stove. And those people pay the sales tax. That same sales tax should apply to people buying expensive items out of state deliberately to avoid paying California taxes.
"The 'luxury tax loophole' encourages big purchases out of California. That hurts local dealers of airplanes, boats and motorhomes. That costs Californians jobs and has a doubly negative effect on the economy of our state."
The Legislature is facing difficult budget-cutting and revenue-raising choices. Stubborn adherence to yacht-tax loopholes will not solve California's fiscal problems. It will invite taxpayers' scorn.
When he met last week with The Californian's editorial board, Gov. Schwarzenegger said everything needs to be put on the table and evaluated. Everything includes loopholes like the yacht tax, as well as program cuts.