President Obama

[Jeebus]

Actually, while Niche's explanation is theoretically correct, the Texas version of the CBO studied the issue and found that the tax cap would reduce tax revenues rather than increase them. So, the correlation to teachers is that in spite of the prediction of lost revenue, the GOP controlled legislature passed the tax cap anyway, adding to the funding shortfall. This in turn assures that school districts will receive less funding for which to pay teachers.

Thank you this legitimate reply.

[Mister X]

Wow...I don't think I've seen such a hissy fit in quite a while. For those of you who don't have small children, this is the type of reaction you get from 6 year olds defending their favorite toys.

Like I said, you have to talk down to republicans.

'Hissyfit' is an excellent word to describe the birthers (both before and after the president took time away from more important matters to address them). See what I mean? If you want to communicate with republicans you must lower yourself when you talk to them so that they MIGHT understand.

Case in point, President Obama stooped to their level and provided a birth certificate.

Now MOST republicans understand that the president was born in America.

Some the lowest republicans didn't believe Usama bin Laden was dead when the president said it. But they believed the surviving members of Al Qaeda when they said he was dead and that there would be revenge. Again, in order to communicate with republicans you must stoop to their level (if only for a while).

Al Qaeda doesn't seem to have any trouble communicating with republicans.

[TheNiche]

Actually, while Niche's explanation is theoretically correct, the Texas version of the CBO studied the issue and found that the tax cap would reduce tax revenues rather than increase them. So, the correlation to teachers is that in spite of the prediction of lost revenue, the GOP controlled legislature passed the tax cap anyway, adding to the funding shortfall. This in turn assures that school districts will receive less funding for which to pay teachers.

Admittedly, it comes down to a handful of coefficients. I'd be curious to see the study. It had to have been challenging given (what I would imagine would be) so few valid datasets to compare to. It'd also be interesting to see their estimates of secondary economic impacts, particularly with respect to employment.

Do you know of a link?

[RedScare]

Admittedly, it comes down to a handful of coefficients. I'd be curious to see the study. It had to have been challenging given (what I would imagine would be) so few valid datasets to compare to. It'd also be interesting to see their estimates of secondary economic impacts, particularly with respect to employment.

Do you know of a link?

$2.8 million loss of tax revenue in the next 2 years alone.

http://www.capitol.state.tx.us/tlodocs/82R/fiscalnotes/html/HB02187I.htm

[Jeebus]

I've always enjoyed when you two do all the leg work. Cheers!

[Ross]

$2.8 million loss of tax revenue in the next 2 years alone.

http://www.capitol.s...ml/HB02187I.htm

My bet is that they took the sales figures for the past few years, assumed they would continue at the same level, with some variation, and calculated how much more or less tax would be collected. I would be very surprised if they even thought about how many large boat sales would move to Florida, with the accompanying loss of related activity tax revenues.

Tax laws change behavior and destroy assumptions.

[TheNiche]

$2.8 million loss of tax revenue in the next 2 years alone.

http://www.capitol.state.tx.us/tlodocs/82R/fiscalnotes/html/HB02187I.htm

They extrapolated historical sales volumes and prices over time. The problem is that Florida's new cap on yacht sales taxes means that they stand to take a cut of our market share if there exists disparity in tax policy. Extrapolation is not a valid analysis because it ignores this recent shock to the historical dynamics of the marketplace.

Faced with a crappy scenario that Texans cannot change, Texans have a couple of options. We can do nothing and lose market share, tax revenue, and marine-related employment to Florida. Or...we can match their tax policy, the extrapolation will hold, and the direct fiscal impact will still be negative, but perhaps not as negative as the do-nothing scenario.

I would also point out that the analysis does not attempt to capture secondary economic impacts, such as to yacht brokers, insurers, financiers, surveyors, or repairers. Those people buy local goods and services and contribute to the local tax base. They should be counted.

Again, I'm not saying that either of these is desirable, just that policy-matching may be the least undesirable option.

[Gary]

Excelent post Mister X! Might I add that because of your well thought out diatribe, I have decided to vote Democratic right down the party line. You've convinced me that Republicans/Conservatives Have the IQ of a rock and are crooks of the worst kind. I've also learned that the Democratic party is full of brilliant, compassionate, selfless people that care nothing for themselves, but only for the good of those less fortunate. Moreover, unlike Republicans/Conservatives, "OUR" Democratic officials are honest, hard working folks who live and breath the Cherry tree belief system.

Thanks so much.

Like I said, you have to talk down to republicans.

'Hissyfit' is an excellent word to describe the birthers (both before and after the president took time away from more important matters to address them). See what I mean? If you want to communicate with republicans you must lower yourself when you talk to them so that they MIGHT understand.

Case in point, President Obama stooped to their level and provided a birth certificate.

Now MOST republicans understand that the president was born in America.

Some the lowest republicans didn't believe Usama bin Laden was dead when the president said it. But they believed the surviving members of Al Qaeda when they said he was dead and that there would be revenge. Again, in order to communicate with republicans you must stoop to their level (if only for a while).

Al Qaeda doesn't seem to have any trouble communicating with republicans.

[Mister X]

You are more than welcomed Gary. It is my pleasure to set people straight so that they may see the error of their ways and I shall only be too happy to share my vast wisdom with other less fortunate lost souls who have been corrupted by the evil, immoral yet anemic republican't party.

[KinkaidAlum]

Think this through. If Florida is a more tax-advantageous place to buy and sell yachts that yacht-owners take enjoyment from moving around, that would seem to be an incentive for yacht sales to occur in Florida and not in Texas. If the sale doesn't happen in Texas, then Texas collects $0 of revenue instead of the cap of $15,625.

Also, the transaction of yachts is a lot like the transaction of houses. There are local brokers involved, as well as marine surveyors, insurers, and financiers. Additionally, the seller often pays for local repairs to the yacht before it transacts. So there is a significant secondary economic and fiscal impact from keeping that business in Texas.

All in all, I think that the fiscal impact will be a wash. But it's a wash featuring lower taxes and more jobs. So that's worthwhile.

Nah, it is you and the stupid House up in Austin that needs to think this through.

People buy and sell yachts in Florida because it is a beautiful place to have a yacht. Texas, not so much. Florida has better water, cooler places to sail/yacht off to easily (Bahamas, the Keys, the Caribbean, etc...) plus, just like Texas, Florida has ridiculously low taxes.

The idea that lowering taxes on yacht sales in Texas will somehow lead to a massive hiring spree in the luxury yacht market is about the stupidest thing I've ever heard. Maybe instead of worrying about multi millionaires and their toys, the state should start worrying about massive cuts to education, R&D, and the like.

[TheNiche]

Nah, it is you and the stupid House up in Austin that needs to think this through.

People buy and sell yachts in Florida because it is a beautiful place to have a yacht. Texas, not so much. Florida has better water, cooler places to sail/yacht off to easily (Bahamas, the Keys, the Caribbean, etc...) plus, just like Texas, Florida has ridiculously low taxes.

The idea that lowering taxes on yacht sales in Texas will somehow lead to a massive hiring spree in the luxury yacht market is about the stupidest thing I've ever heard. Maybe instead of worrying about multi millionaires and their toys, the state should start worrying about massive cuts to education, R&D, and the like.

People buy and sell yachts in both Florida and in Texas. More yachts are transacted in Florida for the reasons you mention, as well as that a larger population is within close proximity of open water. My point was not that Texas should attempt to out-compete Florida for yacht sales, for tourism, or anything of that sort. It isn't about gaining market share; it is about protecting the market share we have for fiscal and economic reasons, because Florida's new tax policy will diminish it otherwise.

Once again, this is not about promoting some lame-brained economic development scheme. It is about chosing between two crappy circumstances because Texans can only react or not react to Floridian tax policy; we cannot change it.

(Btw, an attempt at reading comprehension would be appreciated this time.)

[RedScare]

The more important issue is that the only report in front of them is one that suggests a $2.8 million loss of revenue over the next 2 years. You have no reall basis to claim what their study involved. Regardless, with the legislative budget study predicting a loss in their hands, they voted the tax break for yacht buyers anyway.

This vote shows where their priorities lie. Knowing several legislators, I am comfortable in the belief that they did not even put the 15 or 20 minutes of thought that you put into this equation. And that really is the point here.

[TheNiche]

The more important issue is that the only report in front of them is one that suggests a $2.8 million loss of revenue over the next 2 years. You have no reall basis to claim what their study involved. Regardless, with the legislative budget study predicting a loss in their hands, they voted the tax break for yacht buyers anyway.

Your linked website gave a (presumably) good indication of what the study entailed, and it was inadequate. If my presumption is incorrect, then the problem is that the authors of the study have poorly communicated their methodology or findings. And if they can't articulate their research, then frankly I have little faith in their research. (Replace the word "research" with "god" in that last sentence, and that's the verbiage I use to deal with Mormon missionaries and other religious zealots; that it works on political apologists is not surprising.) So pick your poison. Or demonstrate that I'm wrong, if you are able.

This vote shows where their priorities lie. Knowing several legislators, I am comfortable in the belief that they did not even put the 15 or 20 minutes of thought that you put into this equation. And that really is the point here.

The thought occured to me very quickly, in a time span best measured in seconds. I'm an economics nerd with a formal exposure to game theory. This is what I do. It is what I think about. These ideas come easily. Communicating the thought is what is time-intensive.

As for what is really the point...honestly, I thought we were off topic.

[RedScare]

Or demonstrate that I'm wrong, if you are able.

Or, demonstrate that you are correct....without all of the hideous presumptions that you cavalierly throw about as if they are fact.

[ricco67]

Or, demonstrate that you are correct....without all of the hideous presumptions that you cavalierly throw about as if they are fact.

You mean every thing that is said on the internets isn't true?

Next thing you will say is that the easter bunny isn't a real creature that has an antelope fetish.

Whatever.

[TheNiche]

Or, demonstrate that you are correct....without all of the hideous presumptions that you cavalierly throw about as if they are fact.

Granted it's only anecdotal internet-sourced evidence, but it would appear that John Kerry deprived Massachusetts of a cool half-mil by basing it in Rhode Island, which is more tax-friendly. And you wouldn't suppose that he's the only one that knows about it, do you (or am I still presuming too much)?

http://www.bostonherald.com/track/inside_track/view.bg?articleid=1269698

Whether this convinces you or not that your stance is inconclusive, I certainly think that it's an interesting datapoint.

(Thanks to HTX for PMing me the link.)

[KinkaidAlum]

Sorry, but there's a HUGE difference between a Texan going to Florida to buy and store a boat and someone from Massachusetts doing the same in Rhode Island. It takes about one and a half hours to drive to Newport from Boston. Additionally, Newport has long been a Massachusetts playground and sailing point for the area's best waters (Block Island, Martha's Vineyard, Nantucket, the Cape, Long Island Sound). Using that as an example of what might happen is a pretty big stretch.

I think the thing that I find funny is that this luxury boat market is miniscule. I'd imagine the number of Texans who buy boats like Kerry's ($7 million price tag) in a year could be counted on one hand and without using your thumb. However, those folks clearly have their voices heard in Austin.

What this whole stupid yacht tax issue does for me is remind me that we need to overhaul the ENTIRE tax system and stop allowing states to create these tax havens by taxing the **** out of luxury sales at the federal level. Sorry, but if you can afford to shell out 6 or 7 figures for a boat, then you can afford to pay the taxes on them. After all, it is our tax dollars that subsidize many of the things boat owners use.

[TheNiche]

What this whole stupid yacht tax issue does for me is remind me that we need to overhaul the ENTIRE tax system and stop allowing states to create these tax havens by taxing the **** out of luxury sales at the federal level. Sorry, but if you can afford to shell out 6 or 7 figures for a boat, then you can afford to pay the taxes on them. After all, it is our tax dollars that subsidize many of the things boat owners use.

I think that you're on the right track, but not quite there.

This whole thing is analogous to the "economic development" entities that are funded by state and municipal taxes to try to lure businesses from one place within our country to another place within our country by giving the businesses direct infusions of cash. When one place does it, it begins to make sense for every place to do it because they can't be competitive otherwise. But with everywhere offering corporate welfare, there's no net benefit to anywhere. I think that this game deserves federal intervention.

Similarly, I think that states should have a much more limited ability to tax particular goods or services at a higher or lower rate (whether it's yachts at a lower rate or gasoline at a higher rate). The tax rates and types of taxes can be different because different states have different fiscal characteristics; I just don't want them attempting to out-compete one another directly, and for no good reason.

[kylejack]

Granted it's only anecdotal internet-sourced evidence, but it would appear that John Kerry deprived Massachusetts of a cool half-mil by basing it in Rhode Island, which is more tax-friendly. And you wouldn't suppose that he's the only one that knows about it, do you (or am I still presuming too much)?

http://www.bostonher...ticleid=1269698

Whether this convinces you or not that your stance is inconclusive, I certainly think that it's an interesting datapoint.

(Thanks to HTX for PMing me the link.)

Yes, but the proposed cap is so low that I think it's highly unlikely that they'll maintain or increase revenue. In fact, the sponsor of the Florida bill (which is a higher cap, by the way) said:

But sponsoring Sen. Don Gaetz said the bill's cost is "seed corn" that will spur long-term job creation: "The bill is a hit on general revenue, there is no doubt about that. But if we expect any sort of harvest next year, we can't eat all of our seed corn."

http://www.theledger.../1374?p=3&tc=pg

We shouldn't really be passing measures speculating on some future benefit when we'll take an immediate hit to revenue on a budget that can't really afford it right now. A $5 million yacht sale yields $312,500 but will now yield $15,625. You've got to sell a lot of freaking yachts to make up that loss.

No Texas buying surge

Just the other day, Jeff Erdmann, legislative affairs chairman for the Florida Yacht Brokers Association, told me the new law is doing "terrific." Sure, after I told him I was from Texas, he tried to play down Florida's competitive advantage over the Lone Star State.

"I don't think we have a current surge in buyers from Texas," he told me. "I couldn't say with any certainty that it (the cap) has brought many more buyers in from out of state."

I got the same thing from Bob Offer, senior broker at Denison Yacht Sales Florida, where he's been selling yachts for 30 years.

"Texas isn't losing any business to Florida because of the cap," he claimed. "People don't fly here to buy boats to avoid the tax in Texas. They fly here because we have a whole lot more boats than you do."

http://www.chron.com/disp/story.mpl/metropolitan/falkenberg/7557789.html

[RedScare]

I think that you're on the right track, but not quite there.

This whole thing is analogous to the "economic development" entities that are funded by state and municipal taxes to try to lure businesses from one place within our country to another place within our country by giving the businesses direct infusions of cash. When one place does it, it begins to make sense for every place to do it because they can't be competitive otherwise. But with everywhere offering corporate welfare, there's no net benefit to anywhere. I think that this game deserves federal intervention.

Similarly, I think that states should have a much more limited ability to tax particular goods or services at a higher or lower rate (whether it's yachts at a lower rate or gasoline at a higher rate). The tax rates and types of taxes can be different because different states have different fiscal characteristics; I just don't want them attempting to out-compete one another directly, and for no good reason.

True. It is probably no coincidence that the first thing I thought when I read this tax story was that this sure sounds a lot like the games played by professional sports owners who scare us into believing that we'll lose our sports teams if we do not build them new stadiums. More importantly, they insist that we'll lose the economic benefit of the teams, even though studies NOT done by the team owners suggest that pro sports doesn't increase economic activity, but rather moves it from local restaurants and amusements to the team owner's bank account. Yet, we continue to fall for it.

[Marksmu]

Sorry, but there's a HUGE difference between a Texan going to Florida to buy and store a boat and someone from Massachusetts doing the same in Rhode Island. It takes about one and a half hours to drive to Newport from Boston. Additionally, Newport has long been a Massachusetts playground and sailing point for the area's best waters (Block Island, Martha's Vineyard, Nantucket, the Cape, Long Island Sound). Using that as an example of what might happen is a pretty big stretch.

I think the thing that I find funny is that this luxury boat market is miniscule. I'd imagine the number of Texans who buy boats like Kerry's ($7 million price tag) in a year could be counted on one hand and without using your thumb. However, those folks clearly have their voices heard in Austin.

What this whole stupid yacht tax issue does for me is remind me that we need to overhaul the ENTIRE tax system and stop allowing states to create these tax havens by taxing the **** out of luxury sales at the federal level. Sorry, but if you can afford to shell out 6 or 7 figures for a boat, then you can afford to pay the taxes on them. After all, it is our tax dollars that subsidize many of the things boat owners use.

Basic economics come into play when considering tax subsidies intended to lure business, or to keep business...if Florida is cheaper, Texans will goto Florida to get what they want. If they can get it here for the same price they will stay here for it. A tax reduction (it is not a tax break) will be an incentive to keep business in place. Even Obama knows this....he offered a 100% deduction on all capital equipment purchased in 2010 to encourage more purchases...The company I work for took advantage of that and bought 23 pieces of equipment ranging from $50,000 to $400,000 in 3 months to take advantage of that incentive. We would not have purchased that much all at once without the incentive...it would have been more gradual over more time. We have since had to hire 41 people to operate the 23 pieces for the day/night shift.

The lost income from the taxes on the purchasing of the equipment, are more than offset by the new payroll taxes, the income taxes, and other taxes that are received by operating the equipment...the same exact argument is made for Yachts...though on a much smaller scale, because the market is much smaller.

Also, you have not been up and down the Texas coast much if you think there are not many luxury yachts in Texas. South Shore Harbor is full of luxury yachts, as is Harborwalk, Kemah, Freeport, Corpus Christi, and Rockport....those are the places I have seen them...I am sure there are quite a few more that I don't know of....

Reducing the amount of tax received is still a net increase from losing 100% of the sale....if Democrats can not understand that, then there really is no point in arguing with them...

[RedScare]

Reducing the amount of tax received is still a net increase from losing 100% of the sale....if Democrats can not understand that, then there really is no point in arguing with them...

Except that the study of this specific issue found otherwise. The condescension is nice, but I'll ask you to do the same thing I asked Niche. Show us the specific study that proves the Legislative Budget Office's study of this tax break will not cost us $2.8 million over the next 2 years. Otherwise, your basic economics is neither basic, nor correct.

I will admit, however, that your 100% deduction on purchased equipment is exactly what Niche alluded to, a nationwide tax break to spur purchasing. Of course, that is a temporary fix intended to spur the economy immediately. There will be a drop off in purchasing later, just as happened with the car rebates and home buying tax breaks.

[TheNiche]

Yes, but the proposed cap is so low that I think it's highly unlikely that they'll maintain or increase revenue. In fact, the sponsor of the Florida bill (which is a higher cap, by the way) said:

http://www.theledger.../1374?p=3&tc=pg

We shouldn't really be passing measures speculating on some future benefit when we'll take an immediate hit to revenue on a budget that can't really afford it right now. A $5 million yacht sale yields $312,500 but will now yield $15,625. You've got to sell a lot of freaking yachts to make up that loss.

http://www.chron.com/disp/story.mpl/metropolitan/falkenberg/7557789.html

Go back and attempt some reading comprehension, please.

[Marksmu]

Except that the study of this specific issue found otherwise. The condescension is nice, but I'll ask you to do the same thing I asked Niche. Show us the specific study that proves the Legislative Budget Office's study of this tax break will not cost us $2.8 million over the next 2 years. Otherwise, your basic economics is neither basic, nor correct.

I will admit, however, that your 100% deduction on purchased equipment is exactly what Niche alluded to, a nationwide tax break to spur purchasing. Of course, that is a temporary fix intended to spur the economy immediately. There will be a drop off in purchasing later, just as happened with the car rebates and home buying tax breaks.

The link you posted, if you read the methodology just appears to have extrapolated past data and assumed a relative constant quantity...I will bet 10 to 1 it did not take into consideration lost sales...I believe that all they do is say how much if we leave it as it is and we collect taxes on x number of yachts, and how much if we change it and collect taxes on x number of yachts. It is unlikely the study took any other factors in...as they would be purely 100% speculation because it is impossible to guess how many yachts will be bought in any given year.

So while on paper I would agree with you that it appears the bill would have a net negative effect, I think, and I do not have hard numbers, that the net is actually positive because those sales may have gone elsewhere if it were not modified to match.

Niche also makes a very important point....the secondary benefits are large and are unlikely to have been included in the study. There is an entire industry dedicated to sucking every little penny out of yacht owners...slips are not cheap, but the maintenance on yachts is unbelievable...a yacht in saltwater, deteriorates so quickly that it requires constant maintenance...if even a few leave the state the effect would be felt on the ship yards and the yacht service industry. If they are bought here they are more likely to stay here.

Furthermore, a multimillion dollar yacht owner may not care about the difference in taxes, but the minimum was $250,000 which would encompass quite a few offshore fishing boats that are not really considered yachts....more of a weekender...A wealthy Joe blow who is purchasing a large offshore sport fishing boat, may be swayed by a few thousand dollars in taxes...I would be....If I were doing that and the difference was a few thousand, I would travel to make the purchase and then fish the return trip back to Galveston. The savings would pay the fuel and bait, and I would get to do what I was buying the boat to do in the first place.

[TheNiche]

Except that the study of this specific issue found otherwise. The condescension is nice, but I'll ask you to do the same thing I asked Niche. Show us the specific study that proves the Legislative Budget Office's study of this tax break will not cost us $2.8 million over the next 2 years. Otherwise, your basic economics is neither basic, nor correct.

The absence of evidence is not evidence of absence.

The scope of the LBO study you linked to is either grossly inadequate or the findings of the study were inarticulately communicated to the public. Either way, it's pretty well useless. You should put in a public records request to see the full text. It will either validate your belief that bureaucrats offer exhaustive analysis with a bottom line you can trust without reviewing the top lines, or...not. Go on, I dare you. What, are you chicken?

Otherwise, your basic economics is neither basic, nor correct.

I think you put it best.

Niche's explanation is theoretically correct

[TheNiche]

Furthermore, a multimillion dollar yacht owner may not care about the difference in taxes

Bull! They didn't get wealthy by not caring about taxes. They're more cognizant of taxation than anybody.

[Ross]

Furthermore, a multimillion dollar yacht owner may not care about the difference in taxes, but the minimum was $250,000 which would encompass quite a few offshore fishing boats that are not really considered yachts....more of a weekender...A wealthy Joe blow who is purchasing a large offshore sport fishing boat, may be swayed by a few thousand dollars in taxes...I would be....If I were doing that and the difference was a few thousand, I would travel to make the purchase and then fish the return trip back to Galveston. The savings would pay the fuel and bait, and I would get to do what I was buying the boat to do in the first place.

If you bring the yacht to Texas, you have to pay sales tax on it. The yachts will stay in Florida, and the fishing will be there.

Saving $200k in taxes on a boat purchase pays for a lot of flights to Florida. If I were buying a million dollar or more yacht, I would certainly take that into account before just giving the State of Texas a pile of my cash.

[Marksmu]

If you bring the yacht to Texas, you have to pay sales tax on it. The yachts will stay in Florida, and the fishing will be there.

Saving $200k in taxes on a boat purchase pays for a lot of flights to Florida. If I were buying a million dollar or more yacht, I would certainly take that into account before just giving the State of Texas a pile of my cash.

You dont pay sales tax again when you move the boat from Florida to Texas, just the TXPW boat registration....that is really nominal when compared to sales tax. The TXPW registration is very inexpensive.

[Marksmu]

If you bring the yacht to Texas, you have to pay sales tax on it. The yachts will stay in Florida, and the fishing will be there.

Saving $200k in taxes on a boat purchase pays for a lot of flights to Florida. If I were buying a million dollar or more yacht, I would certainly take that into account before just giving the State of Texas a pile of my cash.

You dont pay sales tax again when you move the boat from Florida to Texas, just the TXPW boat registration....that is really nominal when compared to sales tax. The TXPW registration is very inexpensive.

[Heightsite]

Hello Police State....

http://godfatherpolitics.com/6180/obama-signs-executive-order-giving-him-and-federal-government-control-of-all-forms-of-communication-under-any-circumstance/#.UAXPWpKq8mk.email

“The Federal Government must have the ability to communicate at all times and under all circumstances to carry out its most critical and time sensitive missions. Survivable, resilient, enduring, and effective communications, both domestic and international, are essential to enable the executive branch to communicate within itself and with: the legislative and judicial branches; State, local, territorial, and tribal governments; private sector entities; and the public, allies, and other nations. Such communications must be possible under all circumstances to ensure national security, effectively manage emergencies, and improve national resilience. The views of all levels of government, the private and nonprofit sectors, and the public must inform the development of national security and emergency preparedness (NS/EP) communications policies, programs, and capabilities.”

Read more: http://godfatherpolitics.com/6180/obama-signs-executive-order-giving-him-and-federal-government-control-of-all-forms-of-communication-under-any-circumstance/#ixzz20vDVH96H