Initial Response to Budget Agreement on Revenue Bill: No Property Tax Relief and No Reform of Tax Credits; But Wealthy Get Sales Tax Exemption on Luxury Yachts

March 30, 2015. “It appears our legislative leaders couldn’t agree to provide tax relief to struggling homeowners and renters through a middle class property tax circuit breaker but managed to find the political will to provide sales tax exemptions for people buying luxury yachts. This seems like a case of some seriously misplaced priorities,” said Ron Deutsch, executive director of the Fiscal Policy Institute. “We are also dismayed that the IDA tax credit reform proposal advanced by the Governor did not make it into the final budget.  Not reforming the broken IDA and Brownfield tax credit programs is yet another missed opportunity.”

Deutsch also notes that in addition to dropping the Circuit Breaker, the agreed-on revenue bill omits the Executive Budget proposal to expand the sales tax to marketplace providers (like eBay and Amazon).

It also eliminates many of the various tax enforcement/reform measures that were included in the Executive Budget Proposal including the IDA reform proposal and the reduction in net income tax for small business.

No Sales Tax on Yachts

One of the oddest and most offensive additions to the final revenue bill that was not in the Executive Budget, is Part SS, which exempts from the sales tax “vessels” (defined as “every description of watercraft other than a seaplane used or capable to being used as a means of transportation on water”). The sales tax exemption applies to the value of the yacht above $230,000 ( i.e., exempts purchase price of yachts over $230,000 from the state sales tax).

The Fiscal Policy Institute will release a more detailed analysis of the final revenue bill after a more thorough review.