# Let's impose a federal luxury tax **URL:** \ **Category:** Great Debates\ **Created:** [December 7, 2012, 6:44pm UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325 "2012-12-07T18:44:56Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [December 8, 2012, 12:00am UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/21 "2012-12-08T00:00:51Z")
[quote=“Duckster, post:15, topic:643325”] Just to be clear here: [ul] [li]The Bush tax cuts are set to expire 31 December 2012. Those tax cuts affect all income levels.[/li][li]The Democrats want to retain the tax cuts for the bottom 98 percent, while allow the tax rate for the upper two percent to return to former levels.[/li][li]_The Republicans don’t care about the bottom 98 percent._ They want the tax cuts to remain for the rich.[/ul][/li][/quote] Just to be clear the highlighted part is not true, and serves only to cheapen the debate. No Republican is calling for the so-called Bush tax cuts to be eliminated on the non-rich. As for the OP, I don’t have much to say beyond what has already been said, except that I loath targeted taxes because it pits one group against another and politicizes the market for goods and services. ---
**Author:** ![Anny\_Middon](https://avatars.discourse-cdn.com/v4/letter/a/bc79bd/32.png) [@Anny\_Middon](https://boards.straightdope.com/u/Anny_Middon)\ **Post date:** [December 8, 2012, 1:43am UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/22 "2012-12-08T01:43:30Z")
> [@John\_Mace](#): > > As for the OP, I don’t have much to say beyond what has already been said, except that I loath targeted taxes because it pits one group against another and politicizes the market for goods and services. Does this mean you’re opposed to special sales taxes on items such as gasoline, cigarettes, liquor? I’m not saying that I think it’s right to tax such items, I’m just curious as to what you think. ---
**Author:** ![drew870mitchell](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/drew870mitchell/32/3946_2.png) [@drew870mitchell](https://boards.straightdope.com/u/drew870mitchell)\ **Post date:** [December 8, 2012, 2:01am UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/23 "2012-12-08T02:01:13Z")
> [@John\_Mace](#): > > Just to be clear the highlighted part is not true, and serves only to cheapen the debate. No Republican is calling for the so-called Bush tax cuts to be eliminated on the non-rich. > > As for the OP, I don’t have much to say beyond what has already been said, except that I loath targeted taxes because it pits one group against another and politicizes the market for goods and services. The Republican rhetoric is consistent but how they will actually vote (other than “against the President”) is hard to predict. Remember they held the payroll tax cut extension hostage last year. If someone was to finagle to a floor vote a package which kept the top 2% cuts, featured some other Republican hobby horse, and let the lower 98% cuts expire, there’s no sure thing about that. They were willing to let the payroll tax back in last year until it became a political firestorm and even then they were able to attach the Keystone XL pipeline to it. ---
**Author:** ![Duckster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/duckster/32/1244_2.png) [@Duckster](https://boards.straightdope.com/u/Duckster)\ **Post date:** [December 8, 2012, 4:54am UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/24 "2012-12-08T04:54:18Z")
> [@Anny\_Middon](#): > > Does this mean you’re opposed to special sales taxes on items such as gasoline, cigarettes, liquor? One might have a case for gasoline taxes, but the other two are personal, voluntary indulgences. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [December 8, 2012, 5:53am UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/25 "2012-12-08T05:53:39Z")
> [@ITR\_champion](#): > > Right now I’m hearing a lot about the so-called “fiscal cliff”. Democrats want higher income taxes on the rich to raise federal revenue and ensure that the rich pay their fair share. Republicans respond that such taxes would give the rich less incentive to invest and create jobs. > > I propose that we implement a federal luxury tax to be assessed on sports cars, gold-plated watches, ski chalets in Aspen, seven-star hotel rooms, and other things that are purchased entirely or mainly by the rich. This should satisfy the Democrats’ desire to raise new revenues from the rich while satisfying the Republicans’ desire to not discourage investment. In fact, inasmuch as it would discourage the rich from spending more on such pointless luxuries, it would give them more money with which to invest and create jobs. Am I the only one that remembers the yacht tax and how that worked out? People just kept all their yachts in Canada or the Caymans. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [December 8, 2012, 5:59pm UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/26 "2012-12-08T17:59:47Z")
> [@Anny\_Middon](#): > > Does this mean you’re opposed to special sales taxes on items such as gasoline, cigarettes, liquor? > > I’m not saying that I think it’s right to tax such items, I’m just curious as to what you think. We pretty much all use gas, and to the extent that gas taxes are funneled into road building and improvement, I would put those in a different category-- almost like a “road use fee”. So-called “sin taxes” are more of what I was talking about. ---
**Author:** ![Absolute](https://avatars.discourse-cdn.com/v4/letter/a/b2d939/32.png) [@Absolute](https://boards.straightdope.com/u/Absolute)\ **Post date:** [December 8, 2012, 7:06pm UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/27 "2012-12-08T19:06:35Z")
> [@John\_Mace](#): > > We pretty much all use gas, and to the extent that gas taxes are funneled into road building and improvement, I would put those in a different category-- almost like a “road use fee”. So-called “sin taxes” are more of what I was talking about. Even a tax on cigarettes and alcohol can be justified by the increased load placed on the medical and justice systems by smokers and drinkers (in aggregate). The idea of a “luxury tax” is absurd because spending on luxury goods does not by itself cost society anything, and in facts helps the economy for the reasons already stated. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [December 8, 2012, 7:19pm UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/28 "2012-12-08T19:19:16Z")
> [@Absolute](#): > > Even a tax on cigarettes and alcohol can be justified by the increased load placed on the medical and justice systems by smokers and drinkers (in aggregate). I disagree. The vast majority of people who drink don’t damage their health in the process. And there is evidence that moderate drinking is good for your health. As for smoking, I’m not so sure. We all die. My guess is that money is saved by those who die early. But even if you’re right, what is the mechanism to funnel tobacco taxes into health care treatment for smokers? ---
**Author:** ![Absolute](https://avatars.discourse-cdn.com/v4/letter/a/b2d939/32.png) [@Absolute](https://boards.straightdope.com/u/Absolute)\ **Post date:** [December 8, 2012, 7:33pm UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/29 "2012-12-08T19:33:37Z")
> [@John\_Mace](#): > > I disagree. The vast majority of people who drink don’t damage their health in the process. And there is evidence that moderate drinking is good for your health. > > As for smoking, I’m not so sure. We all die. My guess is that money is saved by those who die early. But even if you’re right, what is the mechanism to funnel tobacco taxes into health care treatment for smokers? I meant that smoking is correlated with higher healthcare costs, and drinking is correlated with higher police/legal system costs. There does not need to be a mechanism to explicitly funnel the tax revenue into the healthcare or legal systems for this to be a valid justification, as long as the total tax revenue collected is less than the net effect on the cost to that system. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [December 8, 2012, 7:55pm UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/30 "2012-12-08T19:55:27Z")
It’s a myth that the Democrats hate the rich and want to punish them via taxes. The only reason the Democrats go after rich people for taxes is because they have a lot of money. If there was some painless way to collect taxes, the Democrats and the Republicans would both jump on it. A luxury tax doesn’t make much sense. In terms of the national economy, the sale of luxuries isn’t significant so you wouldn’t collect any significant amount of income by placing a special tax on it. But a special luxury tax would get a disproportionate amount of attention. So a luxury tax would be the worst kind of tax - one that collects a lot of complaints for a relatively small amount of money. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [December 8, 2012, 7:56pm UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/31 "2012-12-08T19:56:40Z")
> [@Absolute](#): > > I meant that smoking is correlated with higher healthcare costs, and drinking is correlated with higher police/legal system costs. But it’s just not the same. When you fill up your tank, you use the roads\*. It’s a one-to-one correspondence. When you drink alcohol, you don’t automatically trigger a police call. Very rarely does that happen. And I’m still not convinced that smokers hit care system more, and if they do, let them pay for it. \*except in a few cases where gas is not used for your vehicle. > [@](#): > > There does not need to be a mechanism to explicitly funnel the tax revenue into the healthcare or legal systems for this to be a valid justification, as long as the total tax revenue collected is less than the net effect on the cost to that system. If you are trying to distinguish between taxes targeted at specific groups or actions, there does. Otherwise, it’s unclear that the revenue wouldn’t be needed from other source if it weren’t available from the sin taxes. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [December 8, 2012, 8:08pm UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/32 "2012-12-08T20:08:33Z")
[QUOTE=Little Nemo] It’s a myth that the Democrats hate the rich and want to punish them via taxes. The only reason the Democrats go after rich people for taxes is because they have a lot of money. If there was some painless way to collect taxes, the Democrats and the Republicans would both jump on it. [/QUOTE] Unless you are saying you speak for all Democrats, and that every one of them thinks the same way you do, it’s not a myth, it’s an exaggeration with a kernel of truth. There are certainly some Democrats who DO hate the rich (one has to simply go back and look at OWS demonstrations and bill boards to get this sentiment) and certainly quite a few who want to punish them for being rich by raising taxes to ridiculous levels (same source, though you can see that sentiment rear it’s head on this board from time to time as well). > [@](#): > > A luxury tax doesn’t make much sense. In terms of the national economy, the sale of luxuries isn’t significant so you wouldn’t collect any significant amount of income by placing a special tax on it. But a special luxury tax would get a disproportionate amount of attention. So a luxury tax would be the worst kind of tax - one that collects a lot of complaints for a relatively small amount of money. Totally agree with you here. You’d get a lot of flack, you’d end up losing a non-zero number of jobs, and in the end you’d gain a pretty trivial amount of tax. Just look at how these sorts of taxes work in Virginia and how The Rich™ get around them and you’ll have a good yard stick for what would happen on the national level if you tried to impose them. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [December 8, 2012, 10:58pm UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/33 "2012-12-08T22:58:42Z")
> [@Absolute](#): > > I meant that smoking is correlated with higher healthcare costs… Not that I am aware. As a matter of fact, there are studies that show that smoking saves money on healthcare, overall. [Cite](http://www.cato.org/publications/commentary/snuff-facts). Government likes to raise taxes off things like liquor and cigarettes because demand for those items is [fairly inelastic (pdf)](http://www.cato.org/publications/commentary/snuff-facts) and so you get a relatively more steady revenue source, as well as the idea that it discourages drinking. Regards, Shodan ---
**Author:** ![FoieGrasIsEvil](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foiegrasisevil/32/16638_2.png) [@FoieGrasIsEvil](https://boards.straightdope.com/u/FoieGrasIsEvil)\ **Post date:** [December 8, 2012, 11:14pm UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/34 "2012-12-08T23:14:49Z")
> [@ralph124c](#): > > The Federal Government has no revenue problem-it has a spending problem. Actually it’s a bit of both, isn’t it? ---
**Author:** ![Absolute](https://avatars.discourse-cdn.com/v4/letter/a/b2d939/32.png) [@Absolute](https://boards.straightdope.com/u/Absolute)\ **Post date:** [December 8, 2012, 11:48pm UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/35 "2012-12-08T23:48:25Z")
> [@Shodan](#): > > Not that I am aware. As a matter of fact, there are studies that show that smoking saves money on healthcare, overall. [Cite](http://www.cato.org/publications/commentary/snuff-facts). > > Government likes to raise taxes off things like liquor and cigarettes because demand for those items is [fairly inelastic (pdf)](http://www.cato.org/publications/commentary/snuff-facts) and so you get a relatively more steady revenue source, as well as the idea that it discourages drinking. > > Regards, > Shodan I don’t know that a study computing costs from 15 years ago is relevant today, given the changes in the healthcare industry over that time. Healthcare is more expensive now, and we are paying for more of it for more people. As healthcare improves, the argument in your cite that smokers save society money by dying earlier becomes less valid. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [December 8, 2012, 11:51pm UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/36 "2012-12-08T23:51:08Z")
> [@Absolute](#): > > I don’t know that a study computing costs from 15 years ago is relevant today, given the changes in the healthcare industry over that time. Healthcare is more expensive now, and we are paying for more of it for more people. Have you got a better, more recent cite? But keep in mind that many of us are opposed to government control of things, like healthcare, if it is going to mean that the government then tries regulate our lives because of “costs to society”. What is the cost to society of eating red meat? And I ask that as someone who eats very little red meat, but by my own choice. What about skinless chicken breast vs chicken thighs with the skin on? Potato chips vs broccoli? ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [December 9, 2012, 12:23am UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/37 "2012-12-09T00:23:32Z")
> [@FoieGrasIsEvil](#): > > Actually it’s a bit of both, isn’t it? No, most of the problem is in spending. It is next to impossible to fire a Federal employee-in practice, it takes over 7.5 years. Federal employees are guaranteed pensions, regardless of contributions. They also get exceptional health benefits (far above those available to private sector workers). Plus, the get promoted whether they deserve it or not-this boost their pay, without any increase in output. This system is not sustainable. ---
**Author:** ![Ethilrist](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ethilrist/32/4604_2.png) [@Ethilrist](https://boards.straightdope.com/u/Ethilrist)\ **Post date:** [December 9, 2012, 12:45am UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/38 "2012-12-09T00:45:11Z")
If we’re having so much trouble getting the rich to pay a flat rate tax on money that they admit they’re making, there’s no freaking way we’re going to be able to impose a tax that matters on luxuries. ---
**Author:** ![Mdcastle](https://avatars.discourse-cdn.com/v4/letter/m/958977/32.png) [@Mdcastle](https://boards.straightdope.com/u/Mdcastle)\ **Post date:** [December 9, 2012, 12:51am UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/39 "2012-12-09T00:51:22Z")
I’m not sure an Aspen chalet is the best example either. A lot of people with more modest means will buy a second house in a resort area and rent it out when they’re not using it to defray the mortage payments. ---
**Author:** ![Ludovic](https://avatars.discourse-cdn.com/v4/letter/l/7ab992/32.png) [@Ludovic](https://boards.straightdope.com/u/Ludovic)\ **Post date:** [December 9, 2012, 1:28am UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/40 "2012-12-09T01:28:01Z")
> [@ralph124c](#): > > No, most of the problem is in spending. It is next to impossible to fire a Federal employee-in practice, it takes over 7.5 years. Federal employees are guaranteed pensions, regardless of contributions. They also get exceptional health benefits (far above those available to private sector workers). Plus, the get promoted whether they deserve it or not-this boost their pay, without any increase in output. > This system is not sustainable. No, the problem is not federal wages. The savings from _firing_ all federal employees would only make a dent in the deficit, let alone if you simply scaled back their benefits. [Previous page](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325.md?page=1) [Next page](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325.md?page=3)