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Luxury Tax at a Glance

Luxury Tax


Luxury taxes are those which are imposed on goods considered a luxury.Luxury items are those which are not considered essential, such as luxury cars and items such as jewelry.

Items considered a luxury are taxed as a percentage of the sale price, but likely at a higher percentage than the regular sales tax. The tax is considered to be one that is used against the wealthy, as they are more likely to purchase more expensive items.

Luxury taxes may also apply to the purchase of certain items, simply because the purchase price exceeds the maximum threshold. For example, some states, such as New Jersey, impose an additional tax on the purchase of homes that have a sales price that exceeds a certain amount.

Luxury taxes , may also be applied to items that have a price that can increase in response to supply and demand. For example, items that have a high demand, may have a luxury tax imposed when they cost of that item increases in response to demand.


There has been a lot of controversy surrounding the luxury tax, especially when it is applied to things such as hotel rooms.In some cases, hotel rooms may be a necessity, such as those utilized during business trips. In addition, the tax seems to be imposed unfairly against the wealthy or against those that save money in order to purchase an item which is considered a luxury.

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