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New York Is Giving Millionaire Yacht Owners a Massive Tax Break

A major giveaway for rich boat owners is the latest sign that the state is just a playground for the One Percent.
Photo by Jon Fingas

From the minute he took office in 2010, New York Governor Andrew Cuomo has been criticized for favoring the One Percent. His administration has scaled back corporate taxes of all shapes and sizes, and the Democrat is often criticized for cozying up to the state's wealthy residents and, by extension, their campaign wallets. His closest legislative ally, former Assembly Speaker Sheldon Silver, is facing fraud charges. And currently, the federal investigation into the Cuomo administration's handling of the Moreland Commission—which was supposed to rout this corruption—is directly linked to billionaires who have donated to the governor's campaigns, and benefited from his policies.


So yeah, the major tax break for rich yacht and private jet owners included in the latest state budget shouldn't surprise those familiar with New York politics.

On Monday night, in a 44-17 vote, the New York state Senate passed a tax break for New Yorkers who own "vessels" valued at more than $230,000, placing the Empire State in the same league as Florida and Connecticut. Basically, that means that anyone who owns a yacht or, according to state law, any naval vehicle "used or capable of being used as a means of transportation on water" that costs more than $230,000 will not have to pay a sales tax on anything above that amount. Meanwhile, the entire purchase of private jets carrying fewer than 20 people would be tax-less.

The bipartisan provision had already appeared earlier this year, in separate proposals by Assembly Democrats and the Senate GOP, and was ultimately added to the $150 billion budget submitted by Cuomo's team before it was approved by both parties earlier this week. This marks another year that his administration has passed a budget on time—a welcome change in Albany, where budget deadlines were once regarded as a suggestion—and, almost like clockwork, another year that New Yorkers are pissed off.

On Tuesday, a small group of protesters pissed off at the new leisure tax break gathered at the North Cove Marina in Manhattan, just a few blocks from the Freedom Tower and Wall Street. The setting on this overcast afternoon was ideally suited to their purpose: In the distance, yachts could be seen floating at docks scattered along the Hudson River coastline. With various corporate headquarters towering overhead, this was Ground Zero for the rich fucks who would benefit from the new tax provision.



"Pay your taxes!"

"Yacht owners!"

"Pay your taxes!"

Charles Khan, a member of the Strong Economy for All Coalition and a group called Hedge Clippers, led the chant among a handful of progressive activists from groups like New York Communities for Change, Citizen Action NY, and Make the Road. Demonstrators waved a black banner that read, "Hedge Funds = Inequality," as a sole local news camera focused in. Khan described the yacht tax break as "absolutely ridiculous," and called for its immediate repeal.

The tax break was hailed by lawmakers from both parties as a job-creating tool: as State Senate Majority Leader Dean Skelos, a leading Long Island Republican, told reporters this week, "We felt that it was important, especially with the state that we have, with all our natural resources, that people be able to create jobs here in New York State." He compared it to the tax credit that exists for filming in the state, although how having a yacht or a private jet would create jobs is not so clear.

Khan dismissed the idea that the yacht tax break would spur employment. "Any jobs it might create is marginal," he told me after the press conference Tuesday. "At least compared to the jobs that would be created from establishing a living wage for millions of New Yorkers, helping out Dreamers, funding our public school and children's future, and preventing homeowners from foreclosures."


The idea behind the credit, it seems, is to entice rich New Yorkers to buy their giant boats in the state, rather than register the yachts offshore or in Florida. Other states, including Connecticut and Maryland, have recently imposed similar sales tax caps. But yachts are only a tiny sliver of the boating market. Both conservatives and liberals have criticized these and other tax breaks for picking winners and losers, rather than providing substantive relief or policy reform.

James Parrott, an economist at the Fiscal Policy Institute, the New York-based think tank that first spotlighted the yacht tax break, derided this "three men in a room" style of governing, invoking an image of Cuomo, Skelos, and (formerly) Silver drafting the state budget behind closed doors, presumably handing out pet projects to whoever donated the most.

The yacht and jet exemption, Parrott said, was no different, once again underscoring the flagrant cronyism that has long been a hallmark of Albany politics. According to the New York Times, Cuomo met with industry executives at the New York Boat Show in January, and stumped for the exemption. (We reached out to the Governor's office for comment, but yet to hear back.)

"We all know it was once three men in a room," Parrott told the small crowd at the marina, as it began to drizzle. "But now we know it's really three men on a yacht!"

"Get off the yacht," he added later, "and get back to the table."

Other demonstrators echoed these arguments. A man introduced as a McDonald's employee told reporters that he didn't even have money to afford a paddle boat. An education advocate and mother of eight argued that kids in under-funded public schools need computers and textbooks that aren't ripped. A documented Dreamer said he's waited five years for Cuomo to push through the state's DREAM Act, and now has to wait another.

In this sense, the yacht and jet tax exemption exists more so as a symbol of what has become a commonality of the Cuomo years: this fallout and frustration from what critics see as his lack of pure liberalism, centered around issues like a minimum wage hike, funding public education, and immigration reform. To them, these are promises the governor has made, but has yet to follow through on.

"Instead, the people who want to buy yachts or private planes…" Khan proclaimed, as chants of 'Criminal!' and 'Un-American!' were heard in the background. "That has to be made affordable."

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