What`s a luxury?
I know a woman who has three small children; her idea of luxury is taking a bath by herself. My own idea of unaffordable luxury is screens and storm windows you can put up and take down without losing your temper. For a lot of people in this economy, a night out-even something as unspectacular as a movie and a hamburger-has become a luxury.
Congress adopted a narrower definition of the word-furs and jewelry priced above $10,000, cars over $30,000, boats over $100,000 and private planes over $250,000-when it passed the new luxury tax. (The tax, which took effect Jan. 1, amounts to 10 percent of the portion of the price that exceeds these thresholds.)
But where did Congress come up with the numbers? How did the legislators decide, for instance, that a $10,001 mink is a luxury, but a $10,000 mink isn`t?
Did they consult experts? Did they talk to linguists and etymologists and semanticists about where the word ”luxury” comes from and what it really means? Did they invite Elizabeth Taylor to testify about diamonds or Donald Trump to talk about yachts? Did they interview Robin Leach? Naturally not.
They did have the benefit of a Congressional Research Service report on the history of luxury taxes in America, which explains that things get defined as luxuries for two reasons: because they`re ”associated in some way with the upper economic classes” or because they`re not necessities.
By the second definition, anything without which you can maintain some theoretically ”normal” standard of living can be construed as a luxury, even if it isn`t expensive. Movie tickets, soft drinks, playing cards, candy-they`re all luxuries by the second definition, and they`ve all been taxed as such in the past. But imagine the outcry-especially after George Bush`s read-my-lips promise-if Congress had started taxing all of John Q. Public`s small pleasures. It`s easy to see why the legislators voted for the first definition: things only rich people buy.
Back when the budget summit first convened at Andrews Air Force Base, rumors circulated that lawmakers were considering a luxury tax on all furs over $500-”which, of course, was ridiculous, because that meant every fur,” according to Bill Outlaw of the Fur Information Council of America.
The fur information council started lobbying, pointing out, among other things, that 90 percent of all American furriers are small family businesses- something Congress is supposed to venerate-and that the No. 1 consumer of furs is a middle-income working woman between the ages of 35 and 50, somebody members of Congress can`t afford to alienate.
So the fur threshold went up to $5,000, but the fur information council kept lobbying, arguing that it still hit middle-income fur buyers. The House agreed, and raised the limit to $10,000 in its version of the bill. When the time came to reconcile the House and Senate versions, the House limit stood.
Naturally, when the jewelers heard the fur limit was up to $10,000 while the jewelry threshold was still at $5,000, they yelled discrimination. They also pointed out that 99 percent of American jewelers also are small family businesses, etc., etc. So the jewelry limit went up to $10,000.
This is what seasoned Capitol Hill observers mean when they say that the new tax law`s definition of luxury is ”the result of the political process.” And it`s also why the defining limit on luxury cars started at $30,000 and never moved: Nobody complained but European carmakers, who don`t vote in congressional elections.
