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Let's Grab Some Cristal And Take A Cruise On Betsy DeVos's Luxury Tax-Dodge!

Culture

Last month, some American heroes class-warfarin' hooligans untied a $40 million, 163-foot yacht owned by the family of Education Secretary Betsy DeVos, setting it adrift like suburban college graduates during that period after they've completed their undergrad in art history but before they give up and go to law school. SeaQuest -- when you're a $40 million yacht, you get to share a name with a 1990s TV show -- was eventually reunited with the 10 other members of the DeVos yacht family but not before suffering an estimated $10,000 in physical damages along with untold emotional trauma from possible exposure to poor people.

Charlotte Clymer, press secretary at the Human Rights Campaign and professional yacht hater (I kid, she's a nice lady), mentioned in a tweetstorm on the subject that annual upkeep on a yacht is roughly 10 percent of initial purchase price. If you're so bad at math that you don't even have two yachts, this just means it costs roughly $4 million a year to keep SeaQuest in the manner to which it's become accustomed. That's a little more than $75,000 a week, so although some conservatives claimed the vandals inflicted undue financial hardship on DeVos, $10,000 is really just cigar-lighting money for the billionaire.

This isn't to say that the DeVoses aren't frugal. David Sirota revealed in a Newsweek article published Tuesday that the family took the precaution of having the yacht registered in the Cayman Islands. It was even flying the British territory's flag. Look, the yacht's named "SeaQuest" not "America First," and I'm sure everyone on board stood when in the flag's presence.


When buying a vessel or cruising in U.S. waters, American yacht owners like the DeVos family could face state sales or use taxes like those most nonyacht owners face on everything else. However, registering a yacht in a locale like the Caymans—under what has come to be known as a "flag of convenience"—allows those American yacht owners to effectively characterize themselves as foreigners for tax purposes, thereby avoiding the obligation of paying the standard levies.

"If you want to come in and use the waters of a given state of the United States, the question is how can you insulate yourself from getting hit for the use tax?" maritime attorney Michael T. Moore told Capital & Main. "The answer is: close and register offshore. If you close and register offshore, you aren't subject to either a sales or a use tax. You are simply visiting the United States, and you are visiting under a privilege that is granted to certain countries in the world under what is called a cruising permit. Those countries grant the privilege to U.S. flagged vessels, and the United States offers that reciprocal right to vessels flagged by those countries. In practice, it means the permit allows you to go from port to port in different states without having to officially make entry and pay taxes to the states of the ports you visit."

Seems legit. I suppose if they didn't "insulate" themselves from taxes, the DeVos family might have to cut back to just nine yachts. It'd be like Sophie's Choice but with more yachts. Michigan's crazy liberal use tax is 6 percent, which would cost the DeVoses $2.4 million just for SeaQuest. The family is worth $5.2 billion, a fortune earned from their reputable Amway pyramid scheme. Why should they waste any of that helping to fund the local police that were called in when SeaQuest was vandalized? There are also other benefits to waving the foreign flag high.

"If you have a U.S. flag vessel, you fall under U.S. law in crewing it," [Miami maritime lawyer David Neblett] told Grand Cayman Magazine in 2015. "You have to have workers compensation insurance for each of them. There's a big savings to hiring your crew outside the U.S....tax benefits, privacy, liability, crewing requirements, all these are good reasons for our high-net-worth clients to register offshore."

The Cayman Islands in particular is well positioned to take advantage of these loopholes. A 2008 Government Accountability Office report found that wealthy Americans "can minimize their U.S. tax obligations by using Cayman Islands entities to defer U.S. taxes on foreign income" and also warned that some conduct "financial activity in the Cayman Islands in an attempt to avoid discovery and prosecution of illegal activity by the United States."

Good grief, they really don't care, do they? If the DeVos family could register SeaQuest under the Confederate flag, you know my kinfolk would be swabbing the deck. DeVos has headed the Department of Education for almost two excruciating years. She could at least put a four-year (please God, just let it be that) pause on tax dodging and hiring non-American labor. I guess this is only a political-career-ending scandal in a Jeb! administration. When Donald Trump's in the White House, everyone just shrugs.

The DeVoses are relatively "new money," which somewhat explains their conspicuous consumption (10 yachts, 12 private jets, four helicopters, one KITT) and craptastic taste. Kate Wagner at Vox took apart Devos's 22,000-square-foot "Great Gatsby" theme-park summer mansion in Michigan, which would look better if literally taken apart. I'm sure we'll soon learn that the house was built on land that's technically a Cayman Island.

Billionaire Betsy has never worked as an educator, and her billionaire brain is possibly immune to actual education -- recent interviews reveal she's gotten dumber since her confirmation. Education itself is a field where employees regularly struggle with the "leave a penny/take a penny" dilemma, but their current leader "summers" someplace that while garish and tacky could probably contain a few public schools during the off-season.

Will she ever stop trolling us?

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Stephen Robinson

Stephen Robinson is a writer and social kibbitzer based in Seattle. However, he's more reliable for food and drink recommendations in Portland, where he spends a lot of time for theatre work.

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