Luxury taxes can save us from climate collapse and we should start raising taxes now. You, the reader, will not have your taxes increased and nor are you likely to be impacted by a luxury tax; however, the benefits you will gain from a luxury tax are immense.
We already know that lifestyles of the rich and famous kill the environment faster than average lifestyles. It’s hard to compare the carbon footprint of the wealthy to people living in developing economies since the difference is so vast.
Researchers have concluded that the most ethical way to get to a carbon neutral economy is to tax the people what are over consuming.
Not only was the luxury tax “fairer” based on household income—affecting low-income households less and high-income households more—it also was slightly better at reducing yearly household emissions in the very short-term. The researchers note that this might be because it is more feasible to forgo luxury purchases than an essential purchase if the price increases.
While the luxury tax proved fairer in all countries studied, the researchers found that, in low-income countries, a uniform tax could also be fair. In South Africa, for example, low-income households already spend much less on fuel or heating than high-income households. Thus, a uniform carbon tax is already targeting high-income groups by design. In contrast, the luxury carbon tax is most beneficial in terms of fairness when applied to high-income countries. This tax can better account for flexible, nonessential purchases in countries like the United States, where it is difficult to avoid carbon-emitting activities like driving a car in a low-income lifestyle.