10.6 Selective Excise Taxes

Luxury tax

• Redistribution of government cost to high-income individuals and households

Example: Luxury and Fuel-Inefficient Vehicle Surcharge in New Jersey

• “The NJ Motor Vehicle Commission (MVC) imposes a one-time 0.4% Luxury and Fuel-Inefficient Vehicle Surcharge on ownership of new passenger automobiles with a sales price or lease price of at least $45,000, or a fuel efficiency rating of less than 19 miles per gallon. The NJ Division of Taxation does not administer this fee. Dealers are to file and pay the fee to MVC on a quarterly basis through the Division of Revenue and Enterprise Services.”

Federal level: Omnibus Budget Reconciliation Act of 1990 (since repealed)

• Luxury tax on planes, yachts, furs, and jewelry