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>In theory I like the idea of a "tax on consumption", because it suggests a penalty on conspicuous consumption and wasteful spending. If you want a penalty on

>In theory I like the idea of a "tax on consumption", because it suggests a penalty on conspicuous consumption and wasteful spending. If you want a penalty on conspicuous consumption then simply levy taxes on items which count as conspicuous consumption - yachts, private jets, houses > $2 million USD, super cars, etc. It would probably not be a huge list and it wouldn't be a complicated rule. You might miss one or two exceptions, but that's okay. It would be a LOT simpler than going the other way - taxing everything consumed in the economy and then making exceptions for conspicuous consumption.

gyardley 12y ago
We've done all this before - in the early 1990s, George HW Bush passed a 10% luxury tax on yachts, private planes, furs and a few other high-value items. Maybe expensive cars, I don't remember perfectly. The government figured these measures would bring in X dollars in new revenue. It actually brought in much less, about 0.5X, as the purchasers of luxury goods changed their behavior. After the cost of unemployment benefits to people - thousands in the boat-building industry, among others, lost their jobs - the luxury tax ended up being a net negative for the government. It was repealed a couple of years later. The economy's too complex for us to experiment on without unintended and unanticipated side effects. That doesn't mean we should never experiment with it - as long as we do it cautiously - but we should at least learn some lessons from the experiments we've already conducted.
- crdoconnor 12y ago
  A) The sales pitch to get rid of the tax was super slick. No denying that. The substance was thin, though. B) Like I said below: the function of a tax is not to bring in revenue, and counting it a success or not because it brought in above "X" amount of revenue is staggeringly dumb. Taxes are there to disincentivize undesirable behavior and clamp down on inflation, not raise funds. Governments sovereign in their own currency are not revenue constrained. C) The effect removing that tax had on jobs was almost negligible. Look at overall unemployment during that time. Didn't budge. >The economy's too complex for us Hm. Apologetics for the ultra-wealthy...

gyardley 12y ago

We've done all this before - in the early 1990s, George HW Bush passed a 10% luxury tax on yachts, private planes, furs and a few other high-value items. Maybe expensive cars, I don't remember perfectly. The government figured these measures would bring in X dollars in new revenue. It actually brought in much less, about 0.5X, as the purchasers of luxury goods changed their behavior. After the cost of unemployment benefits to people - thousands in the boat-building industry, among others, lost their jobs - the luxury tax ended up being a net negative for the government. It was repealed a couple of years later. The economy's too complex for us to experiment on without unintended and unanticipated side effects. That doesn't mean we should never experiment with it - as long as we do it cautiously - but we should at least learn some lessons from the experiments we've already conducted.

crdoconnor 12y ago
A) The sales pitch to get rid of the tax was super slick. No denying that. The substance was thin, though. B) Like I said below: the function of a tax is not to bring in revenue, and counting it a success or not because it brought in above "X" amount of revenue is staggeringly dumb. Taxes are there to disincentivize undesirable behavior and clamp down on inflation, not raise funds. Governments sovereign in their own currency are not revenue constrained. C) The effect removing that tax had on jobs was almost negligible. Look at overall unemployment during that time. Didn't budge. >The economy's too complex for us Hm. Apologetics for the ultra-wealthy...