A proposal by New York State Senator Andrew Gounardes to eliminate tax exemptions on luxury items has been highlighted in a March 24 report from the Jack Kemp Foundation. The plan could generate up to $2.8 billion annually and shift the tax burden away from working-class families.
According to a new white paper, economists Erik Bergren and Ike Brannon argue that states can make sales taxes more equitable by exempting low-cost goods and raising rates on higher-priced items. The paper proposes a tiered sales tax model that would ease the burden on low-income households while maintaining revenue neutrality. Bergren and Brannon highlight how current flat-rate sales taxes disproportionately impact working families and offer policy alternatives modeled after recent efforts in New York. They suggest that such reforms could serve as a blueprint for progressive consumption taxes at both the state and federal levels.
New York State could gain up to $2.8 billion annually by eliminating tax exemptions on luxury items such as private jet repairs, gold bullion, and racehorses. This is according to a 2025 report from State Sen. Andrew Gounardes, which outlines the revenue potential of reforming sales tax loopholes for the wealthy.
State and local governments in the U.S. collected approximately $500 billion in general sales taxes in 2023, making it one of the largest revenue sources. The Tax Policy Center notes that sales tax revenue is especially critical in states without income taxes.
After Washington, D.C., expanded its sales tax in 2015 to include services like gyms and digital subscriptions, it saw an 11% increase in sales tax revenue. The D.C. Fiscal Policy Institute reported that broadening the base helped stabilize revenue without raising the base rate.
According to its website, The Jack Kemp Foundation is a nonprofit organization that promotes inclusive, pro-growth public policy rooted in the principles of free enterprise, economic mobility, and equal opportunity. It was established to carry on the legacy of former congressman and Housing Secretary Jack Kemp.