"Tax those rich boaters!" More politicians need an education, like Jesus "Chuy" Garcia.

"Tax those rich boaters!" More politicians need an education, like Jesus "Chuy" Garcia.

As you know by now, I have written about how sailing is a middle-class activity.  Of those who sail and own boats, 75% of them nationwide are middle-class with household incomes under $100,000.  Sailing is not about the “one-percenters,” not even close.  It’s about you, the middle class.

Again, we are the target of a misconception, one that I fervently work to educate the populous on.

“Tax the rich” or “class warfare” always sounds good in elections.  What we need here is an honest discussion.  Jesus “Chuy” Garcia said in the mayoral panel on 3/25/2015 that one of his ideas is to put a “luxury tax” on boats.

Provided by Lou Sandoval of Karma Yacht Sales, Chicago, IL

“Oh God, here we go again,” is what I say:

  • In 1990, the U.S. Congress instituted the “Luxury Tax” where a 10% tax applied for amounts above $100,000 paid for a new boat.  An estimated 25,000 skilled labor jobs were lost, as boat sales plummeted 42% from $17B in 1989 to $10B in 1992 and many boat builders filed bankruptcy, never to return to business.  In 1993, Congress repealed the Luxury Tax.  It did not work.
  • In 1985, Mayor Harold Washington implemented a 50% surtax on Chicago mooring holders.  The result?  The Chicago Harbor system saw a reduction of boaters of approximately 20%, reducing harbor revenue by 30%.  It did not work.
  • In the current economic downturn in the housing market, initially 40% of workers in the recreational marine industry lost their jobs provided by a survey in April 2011 by the National Marine Manufacturers Association.  While a good number of these workers have returned to work, the numbers are still much lower than the 2007 figures before this economic downturn.  Another measure, in Illinois new boat, engine and equipment sales in 2006 was $369,000,000 and in 2011 $268,000,000 a 28% decline.
  • Recreational boating has an annual impact to the State of Illinois of $3.93 Billion represented in over 648 small business and over 31,000 jobs.
  • The current harbor system in Chicago currently has a close to 25% vacancy rate.

This “hitting the rich” has missed its target, it is way off target.  Boating is hyper-sensitive to any economic change, the past history has made this crystal clear.  A “luxury tax” on boating kills jobs, boaters flea to harbors outside of Chicago within easy driving range, or give up boating, and hurts an industry already battered by prior politicians whacking at the middle class, while sounding like they are whacking the wealthy, which they’re not.

I don’t live in Chicago, and would hope to educate Mr. Garcia about this idea, before it ever gains any traction.

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