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.