The Interactive Great American Taxing Game: Luxuries
It’s the Great American Taxing Game and you have chosen to tax luxury goods like yachts, fur coats, and expensive jewelry. Many people in the world today are suffering, but a small minority has plenty of money to spend on luxuries. It makes sense to tax these luxury items heavily and redistribute the wealth, right? Your host Prof. Art Carden explains that this isn’t as clear cut as it first appears. There are many substitutes for luxury goods. A heavy tax on yachts, for example, is more likely to hurt the people building the ships than the super-rich who might decide not to buy one if the price is too high. Is taxing luxury goods the best option for raising government revenue? Don’t forget to see what would happen if you taxed oil companies or cigarettes instead.
The Crusade for Politically Correct Consumption [article]: This FEE article discusses how the push for sin taxes invites pork-barrel politics and stems from puritanical elitism.
A Higher Gasoline Tax Will Solve Everything? [article]: Another FEE article compares gas taxes to sin taxes, arguing that they are ultimately paternalistic measures.
Luxury Tax [encyclopedia entry]: A definition and history of the luxury tax.
The Effect of Tax Changes on Consumer Spending [report]: The New York Federal Reserve reports on the impact of taxation on consumer behavior.