‘Balancing Act’ bill would eliminate boat deduction
A Minnesota congressman has proposed a bill to address sequestration by making several changes to the federal tax system – including one that could hit the boating industry.
Rep. Keith Ellison, D-Minn., has introduced H.R. 505, called the “Balancing Act.” Among the tax code revisions he proposes is eliminating the second-home tax deduction, but only for boats. The deduction would remain intact for cabins, RVs, etc. To qualify as a residence under current law, a boat must have a sleeping space, a toilet and cooking facilities.
The proposal is a common one that reflects a misunderstanding that a tax on boat owners is a tax on the rich, according to the National Marine Manufacturers Association. NMMA points out that most truly wealthy individuals are likely to pay cash for their boats or to already have reached the total $1.1 million cap on their primary residence.
Three-quarters of all boat owners have a household income of less than $100,000, and the median household income for boat owners falls between $50,000 and $75,000, according to NMMA.
The bill has 16 co-sponsors, all Democrats, and has been referred to the House Subcommittee on Higher Education and Workforce Training.