The Taxation of Luxuries and the Rate of Interest

A. F. McGoun

The Quarterly Journal of Economics, 1919, vol. 33, issue 2, 298-320

Abstract: I. Luxury defined as consumption which does not increase capacity for labor, 298. — Superfluities include consumption necessary for business connection, 300. — Short and long periods, 301. — Capacity for labor varies with consumption of necessaries, 301. — Classification of commodities, 302. — II. Demand for necessaries inelastic because (a) their consumption benefits both present and future, 304. — (b) Capacity for labor is limited, 306. — A tax on luxuries would divert labor to production of capital, also lessening demand, 307. — Labor would become more productive and real wages would rise, 308. — Wealth would be increased, 309; and transferred to people whose effective desire of accumulation is strong, 310. — III. Possible decrease in quantity of labor expended, 314. — Self-development not labor, 315. — Leisure, defined as time not devoted to labor, is either necessary or superfluous, 316. — Annual product varies inversely with superfluous leisure enjoyed, and might be either decreased or increased, 318. — Rise of wages might check fall of interest; convergence of altruism and foresight, 319.

Date: 1919
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