Tax AvoidQ – This is a very good site, perhaps the best I’ve seen, but I wonder why you have never addressed a question about how these various cruise lines dodge taxes by registering their ships in other countries. If I lived in Florida, where most of the largest  lines are based I’d be really upset. I also wonder each time we cruise (we’ve done eight cruises to date) how much the cruise line I am on is actually paying in taxes. Is the American taxpayer being ripped off?

A – The answer to your question is Yes! Yours is the first question we’ve received on this topic.

Here’s the deal. You’ve got two mega-lines, Carnival and Royal Caribbean, that are publicly traded on the New York Stock Exchange with Corporate Headquarters in the US and they had combined profits last year in excess of $2 billion. Together, these two behemoths control just about 75% of the total word cruise market.

Any impartial observer would have to include that these lines, and virtually all of their competitors including those in the upscale sectors of the industry, take full advantage of our current maritime laws and their loopholes. This means they escape most US taxation, they normally pay no attention to US labor laws creating some unbelievably bad workplace environments and they have a steady and surprisingly consistent record in fighting proposed new environmental regulations. They also consider themselves immune from US laws related to safety. Until very recently, for example, the reporting of alleged rape attacks by crew on passengers went largely unreported.

While it is true that the mega lines have to adhere to regulations from our Coast Guard and the Centers for Disease Control, their approach to taxes is quite clear. Royal Caribbean, for example, has stated in its SEC filings that “we and the majority of our subsidiaries are currently except from the United States corporate tax on income from the international operation of ships.”

Carnival is incorporated in Panama. In the past, it has only paid corporate taxes on the income earned by subsidiaries Princess and Holland America on sales of domestic hotel packages.

If Royal Caribbean and Carnival Cruise Lines did not take advantage of current Maritime Registration laws, your government would have earned an estimated $1 billion in corporate taxes yearly.

But let’s be clear about something else. If all cruise lines sourcing primarily American guests were, somehow, forced to abide by US tax and labor laws, would you be willing to see the cost of cruising double overnight?