Originally Posted by AHFN

If you could do it with no corruption whatsoever, and no chance of it, I'd approve. But you might as well wish for world peace, infinite money, and good weather every day. I prefer to keep my wishes realistic. For instance, I wish that I will fall asleep in fifteen minutes. Now that one I know can come true.

Originally Posted by Oregon Elephant

Yet, 23 minutes later, you're still on the forum.

Originally Posted by nerv14

I have been intereted with a tax on luxury goods, such as private boats, huge houses or expensive cars, because it would be a way to increase taxes on the rich without the income tax.

That tax may also be very helpful with universal sales tax instead of the income tax. In the best case scenario, a luxury tax would take away some of the regressive taxing that exists in a much larger sales tax.

Does anyone think that it would be practical, because I am unsure if the government would be able to determine what is considered "luxury" or not.
I would consider items such as large houses, fine wines or hellicopters to require an added tax.

What does everyone else think?

Originally Posted by Chan

Been there, done that!

Luxury tax. (Federal Taxation)
Luxury Tax Under Attack - New York Times

Originally Posted by nerv14

Thank you for showing this to me, people were saying that a luxury tax had been done, but I had no idea when or where.

One of the problems with this tax is that when it was enacted it was done very quickly and the law was not very specific, which is an almost inherent problem with a luxury tax. But if more time was put into the specifications then it could of worked out better.

Only 5 industries were taxed extra which meant that the scope of the tax was inherently unfair. However, that was just to make it easier to mannage which would be even more of a problem if more items were included in the tax.

Even if the tax was thought out more I can think of no way to prevent the problems with people who use "luxury" items for their bussines and they want to use those items in their spare time. Even if companies were allowed exceptions that could be used at any time, that would just create a black market for the exception, and the tax would not work.


But I can say that when the tax harmed companies in those industries a large amount of that could of been from the luxury tax being 10% when if this tax was really tried it could begin at only 5% to test it out more.

Even though a tax will harm the companies that sell the luxury items i am just bringing up a luxury tax as a way to make sales tax more progressive. So if a luxury tax was used it would just reduce the normal sales tax and increase business activity throughout the rest of the economy.

Despite that, the problems with luxury items in companies seems like an unfixable barrier in making a luxury tax work...

If anyone has any ideas to fix that I would like to hear them...

Originally Posted by Chan

The greatest harm caused by the luxury tax was to the men and women laid off from the plants manufacturing certain luxury items as a result of reduced demand for these items. The people most harmed by the luxury tax were people who couldn't afford to buy the luxuries that were taxed.

Originally Posted by nerv14

Not completely, because as I said, a luxury tax would be used to reduce taxes in other areas. Since it is rich people buying those luxury goods I would assume that it would make those industries more resiliant to price increases. Since there would be more hiring in other areas, I could guess that it would be close to a zero sum game, but I am no economist.

Originally Posted by nerv14

It is the opposite of a large tariff, you see people being hired in one industry but it will cause more people to lose jobs in other industries. So overall it will cause harm when in a luxury tax it may cause some good, but I am unsure.

Originally Posted by nerv14

Not completely, because as I said, a luxury tax would be used to reduce taxes in other areas. Since it is rich people buying those luxury goods I would assume that it would make those industries more resiliant to price increases. Since there would be more hiring in other areas, I could guess that it would be close to a zero sum game, but I am no economist.

It is the opposite of a large tariff, you see people being hired in one industry but it will cause more people to lose jobs in other industries. So overall it will cause harm when in a luxury tax it may cause some good, but I am unsure.

Originally Posted by Finny

How would reducing taxes in another area help those workers who produce Luxury Items (say like Porsche or BMW or Lexus)? Increase taxes on Luxury items cause people not to buy that item as much (this is consisted with everybody and not those who buy luxury items). That means workers will have to be laid off.. or that Luxury company realigns and stops producing Luxury items. Which means negative income in taxes based on what was assumed for the income of a Luxury Tax.