<P> When a luxury tax is imposed, the majority of people are not affected by it and are not subject to the tax . However, over time, what is viewed as "luxury" might change, resulting in more and more people being affected by the tax . The government may view the revenue from the luxury tax as essential and will not restrict or rescind it . So it may happen over time that goods considered "ordinary" might also incur luxury tax . An example of this can be seen with various commodities in the country of Norway, where at the beginning of last century, oil - powered cars, sugar products, and chocolates were viewed as luxury goods . Today few Norwegians consider sugar or chocolate a luxury, but the luxury taxes on these goods remain . </P> <P> In the United States, many states used to collect state sales tax through the use of "luxury tax tokens", instead of calculating a percentage to be paid in cash like the modern - day practice . Tokens could be purchased from the state and then used at checkout instead of rendering the sales tax in cash . Presumably, the purpose of the practice was to remove the incentive for stores and businesses to avoid reporting income . Some tokens were copper or base metal while some were even plastic . </P> <P> In November 1991, The United States Congress enacted a luxury tax and was signed by the former President George H.W. Bush . The goal of the tax was to generate additional revenues to reduce the federal budget deficit . This tax was levied on material goods such as watches, expensive furs, boats, yachts, private jet planes, jewelry and expensive cars . Congress enacted a 10 percent luxury surcharge tax on boats over $100,000, cars over $30,000, aircraft over $250,000, and furs and jewelry over $10,000 . The federal government estimated that it would raise $9 billion in excess revenues over the following five - year period . However, only two years after its imposition, in August 1993, the Congress decided to eliminate the "luxury tax" since it did not achieve its main objective . It is noteworthy that it "failed" by only raising $8.9 billion--that is, it fell $97 million short of its projected revenue . According to the tax's critics, these revenues were disappointing and unsatisfactory and also negatively impacted the incomes of the sellers of the luxury items . However, the luxury automobile tax remained in effect until 2002 . </P> <P> A luxury tax of 10% on boats over $300,000 and aircraft over $1 million was proposed in 2010 by finance minister Simeon Djankov . Parliament approved the tax for a temporary 3 - year period . </P>

Is there a luxury tax in the united states