Categories: General Tax Terms
Luxury Tax
A luxury tax is a tax imposed on goods and services that are considered non-essential or high-end, typically targeting luxury items such as expensive cars, yachts, jewelry, and high-priced entertainment.
This tax is designed to generate revenue from consumers who have a higher ability to pay and is often applied as an additional percentage on top of existing sales taxes. For example, if a luxury car has a price tag of $100,000 and is subject to a 10% luxury tax, the buyer would pay an additional $10,000 in taxes at the time of purchase.
Luxury taxes can vary by jurisdiction and are sometimes used as a means to promote economic equality by redistributing wealth through taxation on luxury goods.
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