The 1990 “yacht tax” caused a large deadweight loss, because demand for luxury yachts made in the United State?
The 1990 “yacht tax” caused a large deadweight loss, because demand for luxury yachts made in the United States is _______.
very elastic
very inelastic
perfectly inelastic since “rich” people will pay whatever is necessary
perfectly elastic
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June 17th, 2009 at 5:27 am
very eleastic. No one "needs" a luxury yacht.
Raising the "luxury" tax on the yacht did not raise the expected funds, instead it destroyed the boat manufacturing industry.
More important, perhaps, which your teacher might not cover, is that, if a tax is perceived as "unfair" like this one was, people will avoid it if they can.
June 18th, 2009 at 10:37 am
Rich people avoid taxxes at all cost, even if they have to bend the law, just like everyone else. Except they are better at it. The owner of the yacht I was on bought his 65ft C&C for about 350,000 back in 88′. Now check out how he saved money. He signed the purchase papers in international waters then sailed to Mexico, after puchase the boat was not in American waters, so he saved Ca Tax. Then he said it was a buisness, he told me it was a buisness that was going to loose money with a little smile of a millionare who knew what he was doing. The boat was remodeled ( buisness expence ) then he played on it as we took it to Antigua. In Antigua it was chartered ( but not much) and he played on it some more. Eventually it was probly a failed buisness that he neve paid taxxes on, yeah rich people your so smart.