During budget crisis, Texas House committee passes tax break for yacht owners

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"During budget crisis, Texas House committee passes tax break for yacht owners"

In response to the worst state budget crisis since World War II, the Texas House has proposed slashing $27 billion from the budget, including huge cuts to education, nursing homes, and health care for the poor. Yet last Friday, the Texas House Ways and Means Committee approved a tax break for those who want to buy yachts costing $250,000 or more.

A Think Progress has the story of Texas subsidizing the biggest gas guzzlers owned by the richest people at a time of high oil prices and record income inequality.

The bill, HB 2187, was proposed by Houston Republican Rep. John Davis, and would cap the sales tax the state could collect on the sale of a personal boat. According to AP, Davis authored the bill out of fear that yacht owners would start buying their boats in Florida, which has a similar law. Davis described it as “economic development,” while Ways and Means Chairman Harvey Hilderbran (R-Kerrville) said it was “one of those things you have to do.”

The bill was originally estimated to cost Texas $1.4 million annually in lost revenue. It will now move on to be considered by the full House, where several top Republicans have expressed confidence it will pass.

Meanwhile, Democrats are expressing outrage that their GOP counterparts would even consider the bill at a time when they are cutting essential state services:

Rep. Mike Villarreal, D-San Antonio, voted against the measure and lambasted it as wrongheaded at a time when cuts are threatened in areas including education and Medicaid reimbursement rates for health care providers

“With all due respect, sometimes I’m not sure what planet my Republican colleagues live on,” Villarreal said in a statement. “How can they say tax breaks for yachts are a higher priority than supporting our children’s classrooms or keeping nursing homes open?”

Texas faces one of the worst budget outlooks in the country, and amazingly, only about a third of it was caused by the economic downturn. The state has had a chronic shortage of revenue after years of slashing property and business taxes and creating numerous tax breaks and exemptions, just like the proposed one for yacht owners. Yet Republicans still insist on not raising taxes, and as a result have had to rely on draconian cuts to balance the budget.

Under the current proposal, $7.8 billion will be cut from Texas public schools, four community colleges will close, 60,000 students will lose college financial aid, as many as 97,000 teachers and school employees will be laid off, 9,300 government jobs will be eliminated, Medicaid will be shortchanged by nearly $14 billion, and health and human services funding will plummet by a quarter. Despite this devastating toll, Republicans have been reluctant to tap in to the state’s $9.4 billion rainy day fund to alleviate the cuts, even though the fund is one of the most flush in the country.

A Think Progress repost.

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10 Responses to During budget crisis, Texas House committee passes tax break for yacht owners

  1. Mike Roddy says:

    At least they’re making it obvious this time. There is a lingering plantation mentality in Texas, which says that you can make money any way you want, spend it however you feel like, and that the poor deserve to be that way.

  2. Peter M says:

    Plantation Style Laissez faire economics?

    The south in American before 1860- revisited today.

  3. Hegbad says:

    I guess that, with democracy, people get the politicians they deserve. So if some Texan numbnut wants to vote Republican and then has to watch as his state gets flushed down the plughole, I can live with that.

    But my sympathy does go out to future generations who have no say, and who will have no prospect of a decent future if these venal politicians continue to frustrate attempts to prevent catastrophic climate change.

  4. Theodore says:

    Rich people know how to spend money – just look at all the beautiful things they buy. Poor people just waste it on food and housing. Who ever saw a beautiful house or yacht owned by a poor person? Keep America beautiful! Let’s eliminate taxes altogether for anybody with an income above a million dollars per year.

  5. Rob says:

    It’s a wonderful symbolic rallying point, who can be against an article excoriating tax breaks for yacht owners? But the linked article on lost revenue states that this is the sales tax loss and takes no account of the loss of revenue from yacht purchases moving to Florida. I don’t know the number either, but it certainly seems like getting a handle on it before taking a position might be a good idea.

    I’m quite familiar with the “race to the bottom” concept but, if the analysis above were to conclude that failure to pass the law would result in a worse net outcome then Florida is where the ire should be directed. Full disclosure: I don’t live in TX or FL and don’t own or intend to own a yacht.

  6. Rob:

    What? Not passing tax breaks will hurt those poor disadvantaged yacht sellers in Texas, and this is obviously more important than education and health care? Education and health care for the poor are merely “symbolic rallying points”?

    frank

  7. Roddy Campbell says:

    Rob beat me to it, and said it better than I would have done.

  8. Joan Savage says:

    A 108-foot yacht cruising from Florida to Texas at 3-6 gallons per nautical mile might require as little as $12,000 in fuel, more likely more. Just roaming up and down the Texas coast from Galveston to Corpus Christi and back is a similar scale of fuel expense.

    Big carbon footprint, that.

    Even a small fleet of older model school buses or some nursing home transporter vans could do better on gas mileage than 3-6 gallons per mile.

    The post is on a blog on climate progress, so let’s put that in the mix.

  9. Joan Savage says:

    I meant to put Galveston – Corpus Christi round trips in the plural.

  10. Chris Winter says:

    I’d also like to see the numbers on loss of sales to Florida. They could be substantial. On the other hand, If I compare the one-time tax expense of $18,000 on a boat in that class (if new, roughly 35 to 50 feet, depending on features) with the operating costs year in, year out, I tend to be skeptical that the bill will have that big an effect.

    This is based on a quick search in Yacht World. It did seem that the majority of yacht dealers are in Florida and California, but that’s not conclusive.