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Sen. John Kerry avoids "sails" tax

Why isn't Massachusetts Sen. John Kerry's 76-foot sloop tied up at a Bay State dock?

The senator's office says it's because Kerry bought the sailboat in Rhode Island and it will be based at the Newport Shipyard for long-term maintenance, upkeep and charter purposes.

Some are wondering, however, if the fact that the Ocean State has no sales tax was the motivation.

Rhode Island repealed its Boat Sales and Use Tax in 1993, reports the Boston Herald, "making the tiny state to the south [of Massachusetts] a haven -- like the Cayman Islands, Bermuda and Nassau -- for tax-skirting luxury yacht owners."


Massachusetts collects not only a 6.25 percent sales tax on purchases (including watercraft), but also an annual excise tax on yachts.

Sources told the Boston newspaper that the Kerry yacht, christened Isabel, sold for around $7 million, meaning that by locating the vessel in the neighboring state, Kerry saved approximately $437,500 in sales tax and an annual excise tax of about $70,000.

Massachusetts Department of Revenue spokesman Bob Bliss confirmed that Kerry doesn't owe the state sales tax.

However, if the Isabel is berthed in Massachusetts waters within six months of purchase, Bliss says there is a "presumption of use" in the state and Kerry would owe the 6.25 percent use tax to the Bay State.

And should the boat change its berth to another Massachusetts port after six months, Bliss said the state would have the option to go after Kerry for the state taxes.

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