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Published in TidBITS 24.
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Luxury Tax

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Those of us who engage in sinful activities have become used to paying for them in the form of high taxes. Sin taxes, more commonly known as luxury taxes, bring in revenue from the sale of alcohol, cigarettes, and gasoline. But computers? Since when are computers sinful, except perhaps when their primary use is to run MacPlaymate?

According to a plan to reduce the US federal deficit, a luxury tax would be applied to a number of currently untaxed items, such as cars, jewelry, and electronics. That's not the problem. The problem is the price ranges that the government considers luxurious. Cars over $30,000, furs over $500, jewelry over $5000, and electronics over $1000 are all considered luxury items and would be taxed at a rate of 10% on the amount over the threshold. For a $5000 computer (a nice IIci system, for instance), there would be an additional $400 in tax on the $4000 over the $1000 threshold. The fallacy in the plan is obvious to anyone familiar with the industry. A $30,000 car is a pretty nice car - you could probably suffer with a $25,000 car and not really notice much difference. Jewelry and furs are not necessary for much of anything short of vanity (as powerful a force as that may be). But if computers are considered a consumer electronic purchase, as they are currently under the proposed plan, people would be taxed on the machines that they work with and are - to use a popular and irritatingly overused term - empowered by. Machines that increase productivity are in our opinion, not luxuries by definition. We would not complain about the expensive camcorder or VCR or stereo for most people, though, because they aren't necessary in any way, shape, or form unless you happen to be a video or audio professional.

The subject has received a great deal of discussion on the nets, not surprisingly, and the general consensus is that taxing computers as luxury items is a mistake that would severely hurt the low end of the industry - people like students who really can't afford an extra 10% but will do useful work with that machine. Even the new Mac Classic is barely under $1000 in its stripped-down form, and only 8086 PC-clones consistently come in at under $1000. This is not to say that the wealthier customers wouldn't be hurt by the price hike as well, and the entire industry very well might decline further from its already shaky position on Wall Street.

While a few people have expressed the opinion that something must be done about the US federal deficit (which should start being expressed in scientific notation for clarity's sake) and several others have pointed out that the problem faces only Americans, we still feel that it is important to express our feeling on the idiocy of the proposition. Computers must not be restricted to the wealthy any more than they already are, and by keeping prices lower in the US, perhaps the rest of the world will also see lower prices.

Please note that we are not absolutely up to date on the latest budget negotiations, so this tax may be fittingly slashed before it even has a chance to affect us. However, unless you know that the tax on computers is no longer, we suggest that you make your feelings known to the people who make the decision, since they obviously do not understand the issues involved. You can...

  • call your congressional representative's local office to register your opposition to the proposed luxury tax on computers.

  • ask your representative to voice your concerns to the legislators who are negotiating in the budget summit.

  • call members of the budget summit in Washington, D.C. to register your opposition to the luxury tax.

Capitol Hill Senate: 202/224-3121
Capitol Hill House: 202/225-3121
White House: 202/456-1414

Information from:
Morgan Davis -- mdavis@pro-sol.cts.com
William C. DenBesten -- denbeste@bgsuvax.UUCP
Matthew T. Russotto -- russotto@eng.umd.edu
Cushing Courtney Whitney -- cw1z+@andrew.cmu.edu
Brendan Mahony -- brendan@batserver.cs.uq.oz.au
Michael Rys -- mrys@ethz.UUCP
Dave Seaman -- ags@seaman.cc.purdue.edu
Christopher M. Mauritz -- cmm1@cunixa.cc.columbia.edu
Adam C. Engst -- TidBITS Editor

 

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