# 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:** 17\ **Page:** 3
**Author:** ![Absolute](https://avatars.discourse-cdn.com/v4/letter/a/b2d939/32.png) [@Absolute](https://boards.straightdope.com/u/Absolute)\ **Post date:** [December 9, 2012, 1:33am UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/41 "2012-12-09T01:33:40Z")
Yes, the problem is that the government has promised to pay too much money to too many people who are not productive enough to justify the expense. And there are not enough productive people to make up the difference. ---
**Author:** ![Jackmannii](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jackmannii/32/311_2.png) [@Jackmannii](https://boards.straightdope.com/u/Jackmannii)\ **Post date:** [December 9, 2012, 1:55am UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/42 "2012-12-09T01:55:08Z")
Personally, I am for any plan that taxes the other guy. ---
**Author:** ![Absolute](https://avatars.discourse-cdn.com/v4/letter/a/b2d939/32.png) [@Absolute](https://boards.straightdope.com/u/Absolute)\ **Post date:** [December 9, 2012, 2:46am UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/43 "2012-12-09T02:46:54Z")
> [@John\_Mace](#): > > 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? Unfortunately (since I share your opinion), your opposition to it doesn’t do much to change the reality. The US government has presently committed to paying for lots of people’s healthcare, and I don’t see a problem with taxing recreational drugs that cause health problems as a result. Poor dietary choices are not the same thing as recreational drugs. ---
**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 9, 2012, 4:42am UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/44 "2012-12-09T04:42:47Z")
> [@XT](#): > > 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). I don’t personally speak for any Democrats. But I do read their literature. There are people who hate the rich and want to nationalize the wealth. And some of them post on this board. But most of them will denounce the Democrats as being no different than the Republicans and tell you Obama’s problem is he’s just another conservative corporate lackey. Tell them Obama’s a Socialist and their answer will be “I wish.” ---
**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 9, 2012, 5:00am UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/45 "2012-12-09T05:00:08Z")
> [@Absolute](#): > > Unfortunately (since I share your opinion), your opposition to it doesn’t do much to change the reality. The US government has presently committed to paying for lots of people’s healthcare, and I don’t see a problem with taxing recreational drugs that cause health problems as a result. > > Poor dietary choices are not the same thing as recreational drugs. How do you come to that conclusion? ---
**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 9, 2012, 2:27pm UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/46 "2012-12-09T14:27:28Z")
> [@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. > [@Ludovic](#): > > 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. > [@Absolute](#): > > Yes, the problem is that the government has promised to pay too much money to too many people who are not productive enough to justify the expense. And there are not enough productive people to make up the difference. I am not so sure that federal wages or benefits are the issue. I do agree that spending, particularly defense spending is an issue, as is wasteful spending on any number of things/projects/studies/bridges to nowhere, etc. The government spends more money than it takes in, yes. But the nation as a whole has only 48% of the population paying into the tax system, which to me is a huge problem, along with tax cheats, people whom underpay, don’t file, whatever. So what I mean by all that is that not only does the government need to cut spending…it also needs to take in more revenue at the same time if we are to ever emerge from this ungodly mountain of debt. ---
**Author:** ![F.U.Shakespeare](https://avatars.discourse-cdn.com/v4/letter/f/aca169/32.png) [@F.U.Shakespeare](https://boards.straightdope.com/u/F.U.Shakespeare)\ **Post date:** [December 9, 2012, 9:00pm UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/47 "2012-12-09T21:00:34Z")
> [@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. 1980 called - it wants its rhetoric back. The Civil Service Retirement System (CSRS) only applies to employees hired before early 1984. The Federal Employees Retirement System (FERS) is much less generous, and relies more on employee contributions. And there is proposed legislation to replace FERS with an even less generous system for employees hired after 2013. And while you didn’t say anything about the myth that federal employees are ripping off social security by not paying in, it sounded like you were heading there, so here are the facts: CSRS employees do not pay social security taxes, _but they don’t receive social security benefits when they retire._ All the rest of federal employees pay in just like you do. While the health plans offered to government employees are good, I work alongside contractors whose health plans are as good or better. And I am _very_ interested in learning about these automatic promotions you refer to. I could have used the info earlier: I spent 15 years in grade. I finally got promoted this year, after receiving ratings in my agency’s top 1% for several years and deploying twice to Iraq. I wish I’d known there was an easier way. :dubious: And to the OP: I think XT said it best. The unintended consequences of job losses and loophole-finding almost always reduce the already meager revenue gains from a luxury tax. Both parties need to quit keeping silent about social security and Medicare. ---
**Author:** ![F.U.Shakespeare](https://avatars.discourse-cdn.com/v4/letter/f/aca169/32.png) [@F.U.Shakespeare](https://boards.straightdope.com/u/F.U.Shakespeare)\ **Post date:** [December 10, 2012, 4:00am UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/48 "2012-12-10T04:00:13Z")
> [@ralph124c](#): > > .. They also get exceptional health benefits (far above those available to private sector workers). Bullshit. Cite? > [@](#): > > Plus, the get promoted whether they deserve it or not-this boost their pay, without any increase in output. Unmitigated bullshit. See previous post. Cite? ---
**Author:** ![rat\_avatar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rat_avatar/32/255_2.png) [@rat\_avatar](https://boards.straightdope.com/u/rat_avatar)\ **Post date:** [December 10, 2012, 7:41am UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/49 "2012-12-10T07:41:33Z")
To go back to the original post, luxury taxes tend to mostly destroy high paying US jobs as George Bush Sr. learned. > [@](#): > > [In 1990 the Joint Committee on Taxation projected that the 1991 revenue yield from luxury taxes would be $31 million. It was $16.6 million. Why? Because (surprise!) the taxation changed behavior: Fewer people bought the taxed products. Demand went down when prices went up. Washington was amazed. People bought yachts overseas. Who would have thought it? > > According to a study done for the Joint Economic Committee, the tax destroyed 330 jobs in jewelry manufacturing, 1,470 in the aircraft industry and 7,600 in the boating industry. The job losses cost the government a total of $24.2 million in unemployment benefits and lost income tax revenues. So the net effect of the taxes was a loss of $7.6 million in fiscal 1991, which means the government projection was off by $38.6 million.]([George Will](http://www.jewishworldreview.com/cols/will102899.asp)) I am actually for a tax increase, but this is a very foolish way to do so. ---
**Author:** ![RTFirefly](https://avatars.discourse-cdn.com/v4/letter/r/c77e96/32.png) [@RTFirefly](https://boards.straightdope.com/u/RTFirefly)\ **Post date:** [December 10, 2012, 11:04am UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/50 "2012-12-10T11:04:35Z")
> [@ITR\_champion](#): > > 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. Where to start? 1. There’s no shortage of money to invest. In fact, we’ve got a glut of money, that’s why it’s so cheap, in the sense of interest rates scraping zero. The problem is a _shortage of widespread demand_ due to widespread unemployment and low wages, which discourages investment. If there’s a shortage of people with money to buy your stuff, you won’t invest in plant, equipment, and workers to make more of it. 2. The problem with rich people isn’t that they buy all sorts of gold-plated toys; it’s that there’s only so many toys one can buy. If rich people could and did spend practically all their disposable income, that would help the economy enormously. But they can’t. Having a tax that discourages their spending and pushes them to add even more to the savings glut is bassackwards. 3. And then there are the problems mentioned by a number of posters in defining luxury goods as a distinct class for purposes of this tax. There are plenty of ways to soak the rich that make more sense than a luxury tax, if only because that’s a low bar. I’ve got to get ready for work, but I’ll try to remember to drop in later and talk about a few. For now, I’ll just say: financial transactions tax. ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [December 10, 2012, 1:49pm UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/51 "2012-12-10T13:49:48Z")
> [@F.U.Shakespeare](#): > > Bullshit. Cite? > > Unmitigated bullshit. See previous post. Cite? The I suggest you read the news..recently a rather large government agency blew $1.8 million on a conference in Las Vegas. The head of this agency was allowed to retire..on a full pension. ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [December 10, 2012, 1:53pm UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/52 "2012-12-10T13:53:12Z")
> [@RTFirefly](#): > > Where to start? > > 1. There’s no shortage of money to invest. In fact, we’ve got a glut of money, that’s why it’s so cheap, in the sense of interest rates scraping zero. The problem is a _shortage of widespread demand_ due to widespread unemployment and low wages, which discourages investment. If there’s a shortage of people with money to buy your stuff, you won’t invest in plant, equipment, and workers to make more of it. > > 2. The problem with rich people isn’t that they buy all sorts of gold-plated toys; it’s that there’s only so many toys one can buy. If rich people could and did spend practically all their disposable income, that would help the economy enormously. But they can’t. Having a tax that discourages their spending and pushes them to add even more to the savings glut is bassackwards. > > 3. And then there are the problems mentioned by a number of posters in defining luxury goods as a distinct class for purposes of this tax. > > There are plenty of ways to soak the rich that make more sense than a luxury tax, if only because that’s a low bar. I’ve got to get ready for work, but I’ll try to remember to drop in later and talk about a few. For now, I’ll just say: financial transactions tax. I’d add to this excellent post-last year, the senior senator from Massachusetts (John Kerry), purchased a brand new yacht from a New Zealand firm. He paid $7 million, but parked the yacht in RI (in order to evade the MA sales tax and local excise taxes). A shining example of the rich paying their “fair share”!:mad: ---
**Author:** ![RTFirefly](https://avatars.discourse-cdn.com/v4/letter/r/c77e96/32.png) [@RTFirefly](https://boards.straightdope.com/u/RTFirefly)\ **Post date:** [December 10, 2012, 5:38pm UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/53 "2012-12-10T17:38:36Z")
> [@ralph124c](#): > > I’d add to this excellent post-last year, the senior senator from Massachusetts (John Kerry), purchased a brand new yacht from a New Zealand firm. He paid $7 million, but parked the yacht in RI (in order to evade the MA sales tax and local excise taxes). A shining example of the rich paying their “fair share”!:mad: It’s hardly against the law (or even any moral system I’m familiar with) to pay no more tax than one is legally obligated to pay. I used to live in Bristol VA/TN. Tennessee has a high sales tax, but no income tax; Virginia has an income tax and a more middling sales tax. Is it somehow immoral for Tennesseeans living near the state line to choose to do most of their shopping in Virginia? ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [December 10, 2012, 6:42pm UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/54 "2012-12-10T18:42:19Z")
> [@RTFirefly](#): > > It’s hardly against the law (or even any moral system I’m familiar with) to pay no more tax than one is legally obligated to pay. > > I used to live in Bristol VA/TN. Tennessee has a high sales tax, but no income tax; Virginia has an income tax and a more middling sales tax. Is it somehow immoral for Tennesseeans living near the state line to choose to do most of their shopping in Virginia? In fact MA requires you to report and pay sales tax on out of state purchases. There is even an option to pay the state income tax at a higher rate. Curiously, Sen. Kerry never chooses that option!😃 ---
**Author:** ![F.U.Shakespeare](https://avatars.discourse-cdn.com/v4/letter/f/aca169/32.png) [@F.U.Shakespeare](https://boards.straightdope.com/u/F.U.Shakespeare)\ **Post date:** [December 10, 2012, 10:11pm UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/55 "2012-12-10T22:11:20Z")
> [@ralph124c](#): > > The I suggest you read the news..recently a rather large government agency blew $1.8 million on a conference in Las Vegas. The head of this agency was allowed to retire..on a full pension. So, are you backing away from your claim that we don’t contribute to our pensions? And by not commenting on the supposed discrepancy in health care plans, I assume you’re admitting you were wrong there too? ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [December 11, 2012, 12:05am UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/56 "2012-12-11T00:05:21Z")
> [@F.U.Shakespeare](#): > > So, are you backing away from your claim that we don’t contribute to our pensions? > > And by not commenting on the supposed discrepancy in health care plans, I assume you’re admitting you were wrong there too? Who said anything about pensions? My point is that the Federal payroll is huge, and accomplishes very little (for the funds expended). What does the Dept. of Education accomplish? Since its inception (under Carter) it has grown to a $100 billion/year agency-whilst test scores (as measured by the SAT and ACT ) have declined substantially. Is this a good use of money? ---
**Author:** ![F.U.Shakespeare](https://avatars.discourse-cdn.com/v4/letter/f/aca169/32.png) [@F.U.Shakespeare](https://boards.straightdope.com/u/F.U.Shakespeare)\ **Post date:** [December 11, 2012, 2:23am UTC](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325/57 "2012-12-11T02:23:08Z")
> [@ralph124c](#): > > Who said anything about pensions? This guy: > [@ralph124c](#): > > …Federal employees are guaranteed pensions, regardless of contributions… [Previous page](https://boards.straightdope.com/t/lets-impose-a-federal-luxury-tax/643325.md?page=2)