Luxury Tax

Roger Chartier: - 12/4/11

Most of us never pay a luxury tax but it is a tax on items that we really don't need to get along day to day.

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 law was 25% on cars until July 1 of 2008 when it went up to 33%.

For 2011 - 2011 the limit is $57,466.00 including Goods and Services Tax.

This means that if you bought a car for $77,466 you would get taxed on the difference between $57,466 and $77,466 ($20,000)

Luxury tax is only on cars bought from a dealer and the dealer has to include the tax in the price of the car.

There were several concessions put in place.
Fuel efficiency cars got some sort of a break. Motor homes are not luxury vehicles.

This article has nothing to do with the competitive balance luxury tax in baseball that expired in 2011. The term was used by the baseball unions etc in negotiations and has nothing to do with actual taxes.