Progressive policy advocates in New Jersey are calling for an end to the state's tax break on the purchase of yachts, saying the resources could be better used to provide relief to families and small businesses during the pandemic.
The For the Many coalition, which is working to promote a fairer tax code in New Jersey, held a rally at the Hudson Point Marina July 14 in Jersey City alongside Make the Road NJ and the Hudson County Progressive Alliance. The demonstration was meant to draw attention to the needs of ordinary families as lawmakers work on a budget for the next fiscal year.
The groups criticized the three-month spending bill signed June 30 by Gov. Phil Murphy (D), arguing that it cut spending but preserved tax breaks for large corporations and wealthy individuals.
Brandon McKoy, president of New Jersey Policy Perspective, which is part of the coalition, told Tax Notes July 14 that the state loses about $17 million each year because of the tax break for yacht purchases.
The tax break was established in 2015 under Chapter 170, which provided a 50 percent sales and use tax exemption on the sale of new and used boats or other vessels, including motorboats, sailboats, yachts, and cruisers, according to the New Jersey Division of Taxation. The law also limits the amount of sales tax the state levies on noncommercial boat purchases to $20,000.
McKoy said the tax break is “really a giveaway to people who are purchasing very expensive yachts” and is inappropriate while states are struggling with having adequate revenue and resources to provide relief for families and small businesses. He said the lost revenue could be better spent on legislative proposals that would provide children in the state with healthcare and establish a relief fund for undocumented residents who were left out of relief in the federal Coronavirus Aid, Relief, and Economic Security Act.
“We all need to recognize the recession and the pandemic we’re in is worse because of existing disparities in outcomes for racial groups, ethnic groups, and also economic class groups,” McKoy said. “The ravages and damages are falling . . . disproportionately on communities of color, and if we’re going to fix those things, it requires acting differently.”
McKoy said the coalition also supports ending other tax breaks that are not critical to the state, but noted that the group isn’t opposed to all tax breaks. “There are tax breaks that make sense, like the earned income tax credit, which focuses on helping low-income families get by,” he said.