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Not All the Well-Heeled Bothered by Luxury Tax

October 3, 1990

HIGHLAND PARK, Texas (AP) _ Shoppers in this deliriously rich Dallas enclave look at it this way: If you can afford a $50,000 Mercedes-Benz, surely, my dear, you can afford the luxury tax on it.

″I don’t like it, but I think it’s fair,″ said Rick Jones, sorting through designer shirts at the Polo Shop, one of this community’s high-priced shops.

But Randle Stricklin, a salesman at Cartier Inc., where watches range in price from $1,000 to $20,000, complained the tax burden should fall evenly on all retailers.

″It hits hard,″ he said. ″Why single out luxury dealers, who have suffered in the last 10 years - especially in Texas?″

Elsewhere in the country, merchants who cater to the carriage trade complain that the government proposal to raise taxes on big-ticket items - including expensive cars, yachts, jewelry and furs - discriminates against their wealthy clientele.

Though they protest, many merchants are bracing for a flurry of sales as customers rush to put an extra case of champagne or a pair of sapphire earrings on their tab for the holidays, before the tax takes effect.

The 10 percent luxury tax, part of a $500 billion deficit-reduction agreement unveiled Sunday, would apply to the portion of the price of some luxury items over certain thresholds.

For example, a $6,000 fur - priced $1,000 above the $5,000 tax threshold - would cost $6,100, if the taxes are approved by Congress. Cars would be taxed at 10 percent of the amount above $30,000. The threshold for jewelry would be $5,000.

″If you can afford to pay $30,000 for a car, you sure can afford to pay a few hundred dollars more,″ said Terri Jung of Austin as she left a Neiman- Marcus store.

″My first answer as a luxury car dealer is, maybe it isn’t fair,″ said Todd Meier, president of Rodger Meier Cadillac, where $55,000 cars are sold from a chandelier-lit showroom. ″But overall, as a citizen, I think it makes sense to tax people who theoretically can afford it.″

Meier said virtually all of the more than 2,000 new Cadillacs he sells each year would be affected by the tax.

Highland Park, home of the billionaire Hunt brothers and tycoon T. Boone Pickens, sits squarely in the middle of Dallas, a separate world where nannies wheel their charges along streets lined with Mercedes-Benzes, Cadillacs and BMWs.

Highland Park shopper Billy McCarthy said the luxury tax was unjust. ″It’ll just be going for the wealthy,″ he said. ″We’re overtaxed as it is.″

Most agreed the taxes might slow the economy by dissuading middle-class shoppers but would not affect the rich.

″It might prevent people like us. We’re going to think twice,″ said DeAnn Ralston, window-shopping with co-workers outside Bachendorf’s Jewelers.

In any case, luxury is in the eye of the beholder.

Roger Rock, manager of a Tiffany & Co. store, said he didn’t think the taxes would slow business. Tiffany’s catalog lists jewelry ranging from under $200 to nearly $1 million.

″It depends on what you call luxuries,″ Rock said. ″From my point of view, these are all necessities.″

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