When we think of the term “luxury tax,” maybe we picture an extra sales tax attached to certain high-priced goods that are deemed non-essential, like vacation villas and ruby tiaras. Well, the part about the extra tax on goods deemed non-essential is correct, but we don’t have to necessarily be talking about super-expensive purchases for a luxury tax to apply.
For example, if we’re buying a new car and opt for the V10 instead of the V6 because...vroom vroom, we might end up paying a luxury tax on the bigger engine. Or, in certain states, we might pay a luxury tax when we buy certain types of alcohol. (Luxury taxes are sometimes referred to as “sin taxes,” since they’re often levied on things society deems unhelpful, like alcohol consumption.)
There’s some controversy around the whole concept of luxury taxes, as one might imagine. First of all, some question why the government should get to decide what’s essential and what isn’t. And second, our understanding of what is luxurious and what isn’t tends to change over time. Back in 2012, an iPhone 4 was pretty cutting-edge, but if we still have an iPhone 4 today, that’s not exactly a top-of-the-line smartphone anymore. So should iPhone 4s still be subject to a luxury tax? We don’t know, but we will say this: even if there is a luxury tax involved, we still wouldn’t mind getting our hands on one of those ruby tiaras.
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Finance: What is VAT?5 Views
finance a la shmoop what is the eighty or VAT well it's this what okay then I
never mind Breaking Bad was awesome though anyway in finance land VAT or V.A.T[Car drives by financeland sign]
stands for value-added tax and it is simply a consumption tax like the tax
rate on anything you buy in Massachusetts is say ten percent so you
think that car cost thirty grand no it was thirty three grand and you'll pay [Car on a driveway]
other v.a.t.s like a tax for your license plate registration and other
stuff note that the V and the A in their value-added yeah and it's a fair
question to ask value-added for whom and the answer is the government the taxman [Uncle Sam poster appears on wall]
v80 tax is that three dollar gallon of gas at the same rate for Bill Gates as
it does for Joe Sixpack it is a regressive tax that is rich in poor
people all pay the same rate and yes Bill Gates jet probably uses more gas [Bill Gates stood by a jet]
than does Joe six-packs but the rate per gallon is the same and this causes
controversy among various political factions who feel that it's wrong to tax [Political figures speaking on stage]
the poor at the same rate as the rich well when it comes to income tax the
rich are taxed vastly more not just in volumes of dollars taxed because they
earn more money but in the rate of tax applied like let's punish those
hard-working plumbing parts suppliers and reward the guy who's asleep at the [People using laptop on benches]
tollgate taking the five bucks like someone in a blue state making thirty
grand a year pays fifteen percent tax on their last dollar someone making 500
grand pays like fifty cents or half so over time a number of politicians have
suggested that v80 should somehow have an income level overlay that is the
buyer of a given gallon of gas should state what income tax bracket they're in [Man unscrewing gas knob]
when they go to the gas pump and that for Bill Gates that gallon should cost [Gas pump filling up car]
like thirty eight dollars whereas for the Union Tollbooth worker yeah wake up
there buddy five bucks each time well they only have to pay two dollars for
their gallon of gas fair not fair well ask the toll booth guy
you know when he wakes up [Toll both man sleeping]