Sales of new recreational boats plummeted, causing unemployment among boat building workers. 1 answer below »

In 1991 the federal government imposed a 10% “luxury tax” on sales of new recreational boats and on certain other high-priced consumer goods. Sales of new recreational boats plummeted, causing unemployment among boat building workers. In 1996, this federal tax was repealed. What would have been the equity based justification for this “luxury tax.” Draw a diagram similar to Figure 2.

 

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