October 7, 1990

BOTH CONSUMERS and creators of technology products came dangerously close to getting shot in the back last week by the ever-helpful U.S. government. In its desperation to shore up our teetering economy, the great and powerful lever-pullers behind the curtains in Washington D.C. came very close to enacting yet another really intelligent decision about how to cut the deficit: they wanted to impose a luxury tax on computers.

Raised during the big budget summit to negotiate a bipartisan plan for reducing the deficit, the proposal would have put all retail electronics products, including personal computers, in the same class as expensive cars, yachts, jewelry and furs. Thus in the same way that someone would pay a 10 percent luxury tax on the amount over $100,000 that they paid for a yacht, anyone who bought a PC in a retail store would get slammed at the cash register a whopping 10 percent on the amount over $1,000.

A $3,000 personal computer — which is just about what it costs to buy something usable enough to run a small business on — with a decent keyboard and a big enough hard disk and sufficient memory to keep you free from terminal angst, would cost you $200 extra in tax.

Gosh, if I were a consumer who’s been shopping for a personal computer and this proposal had passed, I’d certainly want to rush right out and buy this “luxury” item — which I believe is not a luxury at all, but a tool — and then pay 10 percent for the privilege.

Sounds like a great idea to me. Sounds like a real stimulus for the economy, both for computer vendors and for the small businesses who buy computers. Sounds like a great way to get us caught up with the rest of the world — not to mention with Japan, ahem, whose citizens are becoming more and more technologically advanced, and at lower and lower economic strata, every day.

I found out about this not by reading it in a newspaper, though I certainly should have seen it there, but by a forwarded piece of electronic mail from someone inside Apple Computer. The sender of the message regarding this “luxury” tax, which was being squirted around Apple’s network, was not happy about the proposal.

“We at Apple Computer feel that extending this tax to cover personal computers is preposterous,” the message read in part. “As a nation, we must be prepared to manage our affairs in the Information Age — an age in which computer equipment is not a luxury but a necessity. Yet, the Congress and the Administration seem to be unable to recognize the critical role computers now play in the lives of millions of Americans.”

Obviously Apple has a lot at stake — it’s about to launch an inexpensive line of Macs. And IBM Corp. just made a huge re-commitment to the “home” market a few weeks ago. Though the impact to companies would be disastrous, the effect on the middle-class, consuming public would be far more devastating. They’re already taxed to the throat. It’s a pretty vicious kick in the teeth when the government decides it’s a good idea to tax even the tools they use to try to improve their lives — putting these tools, ludicrously, in the same category as a Mercedes Benz, a yacht or a wad of diamonds.

Okay, okay, so they didn’t win — at least not yet. I talked to Barry Toiv, spokesman for the House Budget Committee in Washington, and he didn’t know much about what happened to the “electronics” clause of the luxury tax proposal, except that it had been hacked out of the summit agreement before it was approved and sent on to Congress.
But he was cautious about what would happen next. “(The tax on electronics) was not part of the summit agreement. But the legislation will not necessarily be identical to the agreement,” says Toiv. “Congress now has to look at this issue, just like the Constitution says. I’m not saying this is something that’s likely to change. I’m saying that you can’t write that it’s impossible.”

So, maybe it’s time to contact members of the Budget Committee and your elected representatives and let your voice be heard about absurd proposals like luxury tax on personal computers. Remind them that we’ll never bring ourselves into the 21st century if we start penalizing our citizens for buying the technology that our engineers design and our computer companies sell. We do nothing but shoot ourselves in the foot in the process; they don’t mind going elsewhere to sell their ideas and wares — plenty of takers in Japan, Europe or wherever — but we will be the ultimate losers if we can’t, or won’t, buy them here.