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Wednesday, July 25, 2007

Luxury Taxes Don’t Just Impact The Rich

David Hogberg has an article in Wall Street Journal’s Opinion Journal about luxury taxes, specifically the luxury tax Democrats are trying to levy against cigars to fund (it’s for the children!) a massive expansion of the SCHIP program.

Hogberg points out that luxury taxes rarely result in the sort of revenue politicians expect.  As an example:

And if members of Congress never considered that the luxury tax would discourage rich people from buying luxury items in the U.S., then they surely never considered that such an effect might not be so good for the Joe Six-Packs who worked in the industries producing luxury items. A Joint Economic Committee study later found that 330 jobs in the jewelry industry and 7,600 jobs in the yacht industry were lost thanks to the luxury tax. Perhaps the greatest irony was that in 1991 the federal government paid out over $7 million more in unemployment benefits to those workers than it collected in luxury tax revenues.

This country would be a lot better served if we all just settled on one method of taxation, be it a national sales tax or a flat tax, and one taxation rate.  Not only would it save Americans and American businesses hours upon hours of time annually spent complying with the tax code (not to mention billions spent), it would also make the amount of revenue going to the government more transparent.  And it would avoid counterproductive taxes such as excise taxes and luxury taxes.

Comments

Yes, but if we went to a flat tax, or something simple all the accountants and tax people would be filing for unemployment… wink

Ace25 on July 25, 2007 at 09:40 am
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First, excerpts from . . .

--(Fair Use excerpts from)--

Where is the outrage over sky-high taxes, regulatory costs?
by Steve Higgins
7/15/07 - New Haven (CT) Register

“Reports last week from two nonprofit groups should serve as a wake-up call to Americans to start agitating for tax reform . . .

“On Monday, the Competitive Enterprise Institute reported that the cost to consumers of complying with federal regulations exceeded $1 trillion in 2006 . . .  almost 10 percent of the nation’s gross domestic product. It’s nearly half the amount of government spending.

“Even more worrisome, the cost of complying with these multitudinous regulations exceeds the amount of individual income tax paid in 2006, about $998 billion, as well as corporate incomes taxes of $277 billion.

“According to the Washington, DC-based advocacy group [ Americans for Tax Reform ], the average American had to work through July 11 this year just to pay all federal, state and local taxes, as well as regulatory costs including workers’ compensation and unemployment benefits.

“Congress should take one of two paths: Either cut tax rates and government spending drastically, or adopt the FairTax, an innovative proposal that would involve abolishing the Internal Revenue Service and its income tax and replacing it with a simple national sales tax.”

--(End excerpts)--

. . . The U.S. income tax system and the U.S. economy are inter-related, and are in DIRE trouble. If we, the citizens of these United States, do not act aggressively to spread the FairTax plan with family, friends and associates - our “nest eggs” stand to be devastated through a coming economic meltdown (Summary with podcast: “Laurence J. Kotlikoff (*) on Long-Term Fiscal Problems in the U.S.”). 

Politicians are putting demogoguery and pandering above responsible governing - and they’re able to do it because Americans do NOT understand - at the “get go” - politicians’ / bankers’ hunger for ever-increasing shares of the working person’s bi-weekly paycheck; Americans do NOT understand the totality of taxes they pay.  The FairTax shines the “light of day” on this, putting citizens back in charge to forcefully demand spending reductons.

YOU AND I MUST ACT to mobilize public opinion, and get the FairTax enacted, because the signs point to a probable devaluation of the dollar (reissuance of an “Amero” ? - under a U.S.-sovereignty-busting North American Union?).

[ NOTE: Does this help clarify your understanding of what’s going on globally?  a) Bush’s persistence on rewarding illegal immigration?  b) the North American Highway now under construction in Texas (to stream cheap labor into the covertly-planned North American Union marketplace designed to compete with 21st-century China market?  c) the gradual increase in value of the Chinese yuan by China corresponding to China’s economic growth? (This will result in the dumping of dollar-denominated debt as its manufacturing economy grows stronger - which guarantees devaluing and ushering-in of the Amero.) ]

Keep in mind, this NAU strategy - supported by the “super-rich” (member-owners of the Fed) - together with their politician buddies who want NOTHING to do with FairTax - runs contrary to simply making the U.S. a “tax free zone” for business under the FairTax.  Politicians and bankers lose power when the U.S. is returned to a “savings-driven economy” from a “debt/interest-driven” economy). 

Powerful “elites,” members of political and monied-interest “clubs” reaching into the halls of power in Washington, depend on keeping you and me uninformed of their plans.  It is up to YOU and ME to ACT - and not live in a state of denial - based on what we now know is clearly happening to our financial futures.

After you consult the Kotlikoff interview (above):

• (If you’re a member of your State FairTax organization) Contact your state or local FairTax Director to learn what you can do.

• (If you’re just learning about the FairTax bill) Join FairTax.org here: Scrap The CODE, NOW !

Ian on July 25, 2007 at 11:35 am
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7,600 jobs in the yacht industry were lost thanks to the luxury tax

I remember that one! Soak the rich! Make yachts more expensive! Lots of unemployed boat builders on the California coast after that one…
Liberals never seem to learn the Law of Unintended Consequences!



For any voter trying to choose between the two candidates for commander in chief, there is no better test than this: When American strategy in a critical theater was up for grabs, John McCain proposed a highly unpopular and risky path, which he accurately predicted could lead to success. Barack Obama proposed a popular and politically safe route that would have led to an unnecessary and debilitating American defeat at the hands of al Qaeda.

Frederick W. Kagan

Proof on July 25, 2007 at 02:47 pm

The 16th Ammendment to the Constitution of The United States of America originated as senate bill SJR 39. After being defeated because of objections to some wording was reintroducted as SJR 40 and “passed”. The Constitution clearly states that
“ all bills for ammendment to the Constitution for the purpose of raising revenue must originate in the house of representatives “ How then can a senate bill become a valid ammendment to the Constitution. It can not!!! So, therefore, the 16th Ammendment is not a lawful ammendment!!!! The Constitution also clearly states that the government my derive it’s sources to run it’s business from a limited sources. A tax, on the manufacturers end, of alcohol. tobacco, firearms, and lastly insurances backed by a foreign government. So you see the IRS is a rogue enterprise that is userping power that is not theirs to have and are not answerable to anyone.

If we the people “have” to be taxed then let it be a flat rate tax and all will pay the same. It will not matter if you make ten thousand or ten million. Each person will bear the same burden to keep the Washington establishment’s pockets full of ill-gotten gains.

edie on July 26, 2007 at 04:32 am
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