Unintended Consequences

Unintended Consequences

By David Windish

"The rich will finally be paying their fair share."

Sound familiar?

No, I'm not talking about President Obama's push for his jobs bill and the taxes to support it. That was what Senators Ted Kennedy and George Mitchell had to say about the luxury tax imposed on expensive yachts as part of the 1990 budget deal. Yes, that's the deal in which the first President Bush broke his promise not to raise taxes. That was shortly after he uttered those famous words: "Read my lips. No new taxes."

So, did the rich finally pay their "fair share?"

Not hardly. The rich stopped buying new yachts made in the USA. Tax receipts were negligible. Boat sales plummeted and workers in the boat building industry lost their jobs. The luxury tax was repealed two years later, a victim of the law of unintended consequences.

Flash ahead to present day...

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View TaxAnalysts Contributing Editor David Windish's opinion in its entirety on TAX.com.

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