Taxing Stupidity

Last Updated Apr 1, 2010 10:42 AM EDT

The tanning industry is up in arms about a 10% excise tax on indoor tanning that was thrown into the recently passed health reform law as a revenue-raiser. The industry is expected to collect some $2.7 billion in taxes over the next 10 years by zapping its clients with additional fees.

The Indoor Tanning Association says the tax places an undue burden on its industry and is likely to (gasp) cause people to think twice before they lie down on tanning beds and have carcinogenic ultraviolet lights cook their skin to the appropriate shade of bronze. (Admittedly, they didn't use exactly those words.)

But their concerns are likely overblown. The government has been taxing stupidity for a long time and it has consistently failed to make Americans any brighter.

Consider tobacco taxes, which were bringing in some $3.6 billion in 1977. Keep hiking those taxes every few years and couple them with massive public information campaigns (partly funded with cancer-settlement dollars) about the health risks of smoking, and you'd think that fewer people would light up. Silly you. There's been a nearly four-fold increase in tobacco tax revenues in the past 30 years. In 2007, tobacco taxes brought in a tidy $15.8 billion, according to the Tax Foundation.

Do people smoke less in Rhode Island, where the per-pack "sin tax" is $3.46 versus 7 cents in South Carolina? Probably, but it's tough to get real numbers since cigarette smuggling is becoming as popular as golf.

States impose excise taxes on alcohol, too. Have you noticed a lot of people giving up drink?

Gasoline taxes, in effect for decades, also were ineffective at quelling demand for gas-guzzling Hummers. It wasn't until market forces drove the price of gasoline over $3 a gallon that recession-scarred consumers suddenly realized that driving a car that's the size and weight of my living room might not be advisable.

But one of the things that bugs the tanning people is that the tan tax was a last-minute substitute for what was once dubbed the "Bo-Tax," which would have levied a fee on cosmetic procedures, said John Overstreet, executive director of the Indoor Tanning Association. Admittedly too much ultraviolet light can cause skin cancer, regardless of whether you got that light from the sun or a tanning bed. (Although Overstreet argues that tanning can also cure Vitamin D deficiencies.)

That may make it seem a reasonable place to put some of the cost of the health bill. But why exempt Botox? Is it just because Botox hasn't been around long enough to know whether the long-term effects of injecting poison under your skin to freeze your face will have today's pretty people puffed up like a bunch of tainted cans?

The bigger issue, said Overstreet, is if you're going to tax everything that's unpopular or that might be bad for you, what do you tax next?

"I bet there are some things that you do that I don't like," he said. "Your sin and my sin are probably very different. It's a slippery slope when special interest gets to say what the government is going to tax."

Indeed. If we're going to tax tanning, why not tax butter and Big Macs? Or texting while driving, for that matter? But before this gets out of hand, I'd like to mention that there are studies attesting to the health benefits of wine and chocolate. Important products like these should be tax-exempt.

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