Another gem from Kevin Williamson, In Defense of Wealth and The Wealthy
We keep failing to learn the lesson of the Battle of the Yacht Tax — one of the many lessons of the 1990s that we should have taken to heart by now but have not.
Toward the end of his presidency, George H. W. Bush did something that helped ensure that it was the end of his presidency: cutting a budget deal with congressional Democrats that raised taxes in spite of his famous 1988 pledge: “Read my lips: No new taxes!” One of the new taxes instituted in 1990 was a 10-percent luxury tax on certain targeted rich-guy (and rich-lady) indulgences such as yachts and furs. You can see the populist argument: Why raise taxes on regular people who count on a paycheck every two weeks, or cut spending that benefits them, when you could just make a wildly expensive yacht a little more expensive? There were a couple of errors baked into that tax-policy cake: One was the assumption that yacht buyers are not very price-sensitive, but they are — price-sensitivity tends to go along with the other qualities of mind that cause people to end up with enough money to buy yachts and the like. The second error was completely ignoring the supply side of the equation: Yes, the people who buy yachts are rich as Croesus, but the people who make yachts aren’t — they are blue-collar workers and craftsmen. Some of the people who sell yachts end up pretty rich, but most of them are salesmen and managers with pretty ordinary incomes. And the luxury tax on yachts pummeled their livelihoods. Overall boat sales fell by almost half, and the sales of the big boats that would have produced big tax liabilities fell by 80 percent. Thousands of jobs were lost, many of them in the states of tax-the-rich Democrats such as Ben Cardin of Maryland, now a senator but a member of the House at that time.
Just as Senator Elizabeth Warren wants to pillage the rich except for the ones who make their money manufacturing high-margin medical devices in Massachusetts, and Democrats at large want to soak all the millionaires except the ones that have shockingly high property-tax bills in San Francisco and Greenwich, Democrats who had supported the yacht tax discovered the hard way that tax policy implicates everybody, that taxes aimed at the rich hit ordinary workers and middle-class people rather than just a few Thurston Howell III types.