By the first president Bush.

Go figure.

I seriously doubt most yachts were under $100,000 back then ($173,000 in current dollars). In any case, revenues from the Luxury Tax (on things other than yachts, too) were about half what was expected–About $17 million. People just changed their buying habits.

And yes, many jobs were lost, 9,400 of them according to the Joint Economic Committee in 1991. 7,400 of them were in the boating industry. Ironically, unemployment benefits paid out resulted in a net loss to the government.

Somebody did push an actual tax credit for yachts (after all, as Bowser says, the rich don’t pay taxes). The “Boat Building Investment Act.” Authored by Ted Kennedy.

Go figure.

Knowing the personalities of the two, Cheney’s book is likely to be a great big “efff you!”, while I expect poor Rummy to argue that he’s just been tragically misunderstood by the rabble who just can’t recognize his towering intellect.

What a couple of putrid bookends.

This led to a real Atlas Shrugged kind of scenario, entrepreneurs were supposedly abandoning the yacht building business en masse and retiring early, or going on food stamps, mass unemployment was hitting the dockyards, thousands of craftsmen were being thrown out of work, it was a really big deal in the yachting community. There was much sackcloth and ashes, gnashing of teeth, shedding of tears and pulling of hair.

But all was not quite what it seemed. For starters, in those days, very few yachts of over $100,000 were being built. That was a really big boat, and comprised only a tiny percentage of the yacht market, in yards, units or dollar sales. In those days sailboats were going for about a thousand bucks a foot (that’s when I bought my MacGregor) and the vast majority of the business, in hulls, boatyards and dollars, was directed to the exploding 20-30 foot trailerable market. Times were good, the middle class had bucks, and competition was strong, keeping prices down.

Not only that, if you read the fine print, the 10% tax surcharge, was not on boats priced over 100k, it was on the excess price over 100k. So if you bought a boat that cost $101,000, the luxury tax was actually $100. The total cost of the boat was (with the new tax), was $101,100. A million dollar boat would cost, with tax included, $1,090,000. In other words, the first 100 thousand was exempt from the 10% tax.

If you routinely built million plus dollar boats, I doubt it would crush your business or that your customers would be driven off, and for the bulk of the yachting industry, with the bulk of small yards and workers making cabin cruisers and ski boats, the tax would have had no effect at all.

Still, the pressure was placed on the lawmakers by the entire industry, and the proposed tax was quickly shelved. Now, I am not claiming the increased tax revenue brought in by the tax wouldn’t have been unfair for the consumer, the industry or the workers. Maybe it was a bad idea. Maybe it was a bad tax and a bad idea. I’m just saying that the proposed negative effects of any tax will ALWAYS be bad for some people. And they are usually the people who are in a position to do something about it. And the bad press is usually copy written by someone with an axe to grind.