Kerry's tax avoiding: right idea, wrong reason.

I agree and disagree with John Hinderaker about John Kerry, Millionaire (he owns a mansion and a yacht).  The basic background: Senator Kerry (D, MA) built and bought a yacht overseas and has parked it outside of Massachusetts so as to avoid paying Massachusetts taxes on it, which are fairly significant.  At least, he was: now that he’s been caught Kerry is making it-was-a-big-misunderstanding noises.  Of course.


On the general point that John makes, I agree that if you have a choice between a state that puts an onerous tax burden on the construction and maintenance on an item that you wish to own, and a state that does not, it is only rational to pick the state that does not.  In this case, Rhode Island decided that it wanted the business more than it wanted an ‘equitable’ tax burden; Massachusetts did not.  Both states got what they wanted.  RI got the business, and MA got the smug feeling of knowing that the rich would get soaked if they tried to do business in MA.  It’s hardly RI’s fault that MA is now realizing that smug doesn’t balance a spreadsheet.

Where I disagree with John is that in this specific case I think that Sen. Kerry is wrong to go regulation-shopping, for two reasons.  The first reason is that when it comes to dealing with onerous local regulatory restrictions neither John nor I would have any viable alternatives to ‘voting with our feet.’  We’re private citizens with no direct control over the government: picking the right jurisdiction to do business in is our only alternative.  Sen. Kerry, on the other hand, is the senior Senator from Massachusetts.  Accordingly, he is – God help us – one of the most powerful people on the planet.  If Sen. Kerry finds Massachusetts’ regulatory and taxation system both objectionable and damaging to the long-term interests of his constituents, it is in fact his responsibility to do something about that, at least on the Federal level… and there is quite a lot that a Federal legislator can do to assist his or her state in solving its problems.  If he or she chooses to get involved, that is.  And there’s the second reason: Sen. Kerry has no problem with Massachusetts’ regulatory and taxation system… as long as it doesn’t apply to him.  He doesn’t care about the jobs, he doesn’t care about the tax revenue going into his state, and he doesn’t care about leading by example.  He only cares about getting caught.


And I submit that only caring about getting caught is not a sufficiently morally acceptable reason for engaging in proper behavior.  It’s certainly not worth praise.

Moe Lane

Crossposted to Moe Lane.


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