Roger Chartier: - 12/4/11
Most of us never pay a luxury tax but, it is a tax on items that we honestly don't need to get along day to day.
Luxury taxes were brought in to increase the money that governments had to fight a war.
Sports payrolls incur a lurury tax for the team players to the extent to which it exceeds a predetermined guideline level set by their sports league.
Recently the New York Yankees paid a luxury tax of $28 million dollars which brought the amount that they have paid since 2003 past $250 million dollars!
The Los Angeles Dodgers only had a luxury tax for payroll of $11.4 million.
The threshold for baseball teams will go up to $189 million in 2015.
Wealthy people are more likely to pay a luxury tax as they are likely to buy something like an expensive fur coat, jewelry, huge yacht, etc.
Yet, some are becoming wealthy after winning a bunch of $$$ on a television show, with the lottery or hitting it big in Vegas.
Originally Congress imposed a 10 percent luxury tax on yachts, private airplanes and expensive automobiles as well as many other items
Some items that were once considered luxuries are no longer so luxurious.
However a million dollar car is.
Cars have had some changes. The luxury tax on them started in 1990 and ended in 2002.
Fuel efficiency cars got some sort of a break.
Motor homes are not luxury vehicles.
On December 31, 2002, the luxury car tax rate had dropped to 4% on a cost of more than $40,000.
That was based on the Manufacturer's Suggested Retail Price for a new automobile. Then that year tax stopped because Congress would not renew it due to its unpopularity.
For 2011 - 2012 the limit was $57,466.00 including Goods and Services Tax.