Quote:
Originally Posted by The12thMan";p="
JP5 is right. She is referring to the luxury tax implemented in 1991.
http://www.ncpa.org/ea/eama92/eama92k.htm
The 1990 budget agreement included federal excise taxes on boats, aircraft and jewelry. The Joint Committee on Taxation (JCT) projected that the luxury taxes on those three classes of goods would raise $31 million in fiscal 1991. In fact, the actual revenue for 1991 was just over half that amount ($16.6 million). But the taxes did have other effects.
* They cost 7,600 jobs in the boating industry, 1,470 in the aircaft industry and 330 in jewelry manufacturing.
* These figures do not include job losses that could be attributed to any other factor such as the recession.
* The lost jobs cost $24.2 million in unemployment benefits plus income tax revenue the government didn't get, so taking into account the $16.6 million collected, the net effect of the taxes was a loss of $7.6 million in fiscal 1991.
It's been a part of Economics 101 ever since. |
There is no real contradiction, here; I said J.P's info was "sketchy"not completely wrong: There was a major restructuring in the boating industry in the early '90s. As I said, I am aware that people with the funds to buy boats costing 100,000 and up, took some of their business elsewhere and I agreed that luxury taxes are not the way to go. What I dispute is the notion that the huge slump in the boating industry at the time was largely attributable to the luxury tax. All the boat manufacturers that I can think of which went out of business in the early 90's were catering to customers in the below $100,000 range. There are a number of factors that affect boat sales beside taxes and the economic climate: the long life of relatively new boat building techniques meant a huge supply of used boats, overcrowding (long waiting lists for moorings and slips) Signs of softening in the industry were evident by the mid '80's.
I know nothing about the other industrries you mention, but the job loss numbers look pretty insignificant.