Why did the government repeal the luxury tax on expensive yachts in 1993?

Question

Please be detailed if possible

Answer 1

Mostly because it failed miserably.  The tax was easily avoided by folks who could afford such extravagance by simply buying it from a foreign source, such as in the Bahamas, Mexico, BVI, Caymans, etc. and bringing it into the country as used and therefore tax free.  Made for a nice summer cruise from the Bahamas or wherever and the cost of the journey was typically less than the tax would have been.

With folks going outside the country to buy their yachts, many dealers went bankrupt due to lack of business.  Maybe it's hard to feel sorry for a yacht dealer, but it also tossed their employees onto the unemployment and welfare lines as well.

This is a textbook example of the Law of Unintended Consequences.  (Had Congress included used yachts it may have worked out differently but once they figured out that they had screwed up it was too late to repair the damage already done so it was simply dropped.)

Answer 2

Because it destroyed the Luxury Yacht business in the U.S.

This is what's called "Unintended Consequences"

The government WRONGLY assumes that if they raise taxes, there will be a corresponding increase in revenues.

Time and time again history has proven this theory WRONG.

When is Washington gonna get it? Probabuly never since they don't understand economics.