Sen. Kerry promises Mass. ‘prompt payment’ of taxes on new yacht docked in tax-free RI

By Glen Johnson, AP
Tuesday, July 27, 2010

Sen. Kerry to pay Mass. tax on yacht docked in RI

BOSTON — Sen. John Kerry moved to end a controversy over his decision to base his new $7 million yacht in tax-free Rhode Island, informing the Massachusetts Department of Revenue on Tuesday that he would “promptly” pay taxes as if the vessel were docked in his home state.

In a statement to The Associated Press, the Democrat said, “As we’ve said from the beginning, we have always complied with tax laws and we always will. … The payment is being made promptly.”

The 2004 Democratic presidential nominee has been dogged by charges of tax evasion since last week, when the Boston Herald first reported about his decision to dock the 76-foot sloop Isabel in Newport, R.I.

Doing so spared Kerry a $437,500 one-times sales tax charge in Massachusetts, as well as about $70,000 in annual excise taxes. Rhode Island repealed those taxes in 1993, making the state something of a nautical tax haven.

Massachusetts officials said Kerry was within his rights to base the vessel in Rhode Island, despite owning homes in Nantucket and Boston, but they also said he would be liable for taxes if he brought the yacht to Massachusetts within six months of taking ownership.

Subsequent news accounts placed the Isabel in Nantucket over the Fourth of July weekend and on Martha’s Vineyard more recently. It is now in a shipyard in Portsmouth, R.I., undergoing warranty repairs. A Kerry spokesman said he chose to base the vessel in Rhode Island not for tax purposes, but charter opportunities and long-term service.

In his statement, Kerry said, “Whether owed or not, we intend to pay the equivalent taxes as if the boat’s home-port were currently in Massachusetts.”

The wording underscored the tax treatment Kerry and his wife, millionaire philanthropist Teresa Heinz, constructed for the boat.

It is registered in Newport but owned by a limited liability corporation based in Pittsburgh, hometown of both Heinz and the ketchup company from which her family derived its wealth. In recent days, Kerry has indicated Heinz was the majority stockholder in the corporation, raising questions about whether a Pennsylvania resident owed taxes in Massachusetts for a vessel based in Rhode Island.

Reporters dogged Kerry at a public event on Monday, and the issue bubbled over to the Massachusetts gubernatorial race on Tuesday.

Independent gubernatorial candidate Timothy Cahill, a former Democrat, told reporters it “looks like” John Kerry was dodging his tax bill and said the revenue department should investigate.

“I don’t think that the state should treat anyone differently — senators, congressmen or regular people — so, if someone’s not paying their taxes that should be paying them, then the DOR should go after them,” said Cahill, who currently serves as state treasurer.

Gov. Deval Patrick, a fellow Democrat, also was asked if he thought Kerry was trying to avoid taxes.

“I think if there’s a tax to be paid he’s going to pay it,” the governor said shortly before Kerry released his statement.

The Massachusetts Republican Party was unyielding in its criticism, despite the promised tax payment.

“Senator Kerry will only pay the taxes because he got caught,” party Chairwoman Jennifer Nassour said in a statement. “He should spend more time creating jobs rather than customizing his yacht. Democrats think they live by another set of rules, and the voters of the commonwealth will soon remind them they do not.”

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