Luxury Taxes Sin Government People Lot Money United

A "luxury tax" is a "tax" (a way for a government to receive money) on "luxury goods" (products that are very expensive and nice, but "nonessential" (not necessary; optional)) such as sports cars, private airplanes, jewelry, imported foods, or large "real estate" (the buying and selling of homes and land) purchases. Most people do not buy luxury goods, so they are not affected by luxury taxes. But luxury taxes can have a big impact on "wealthy" (rich) individuals with a lot of "disposable income" (money that can be spent after one has paid for food, housing, transportation, and more).

Luxury taxes are not used very often in the United States. When they are used, they are usually "established" (created) and applied at the state level. There was a national luxury tax on cars that cost more than $40,000 but the tax "expired" (became inactive) in 2002. But most luxury taxes in the United States have been "levied" (applied) during "wartime" (periods when the nation is fighting wars). Wartime luxury taxes are designed to increase government "revenues" (money coming in) to cover the costs of the war and to "divert" (change the direction of) resources from the production of luxury goods to the production of war goods.

Luxury taxes shouldn't be confused with "sin taxes," which are taxes levied to change people's behavior. A sin tax might be levied on sales of cigarettes, alcohol, or foods with a lot of fat or sugar. In recent years, many states have considered levying sin taxes to "confront" (deal with) the population's "obesity" (very overweight) problems by discouraging people from eating "bad" (unhealthy) food.