Tanning Salons Fried by Healthcare Reform Tax

When earlier versions of the Health Reform Bill were being discussed, the Senate bill contained a 5% tax on cosmetic services (the “Botax”).  In 2004 a similar tax was passed in New Jersey, snuck through in the middle of the night.  That tax has collected revenues short of expectations, and efforts to repeal it, even by the bill’s original sponsor, have so far been unsuccessful.

The nationwide cosmetic surgery tax was opposed by the American Society of Plastic Surgeons (ASPS) as well as other societies whose members provide cosmetic services.  Normally these societies are rivals, especially those who are trying very hard to establish their members as equivalent providers of cosmetic surgical services.  (Side note, they are doing a very good job in this regard). 

Important points were made in the effort to get the cosmetic tax removed.  A majority of those seeking cosmetic services are women, thus the tax would discriminate unfairly towards them.  Today’s cosmetic customer is middle class, and has typically saved for, or is financing, their chosen service.  Other arguments such as a blurry line between cosmetic and reconstructive services, and using physicians as tax collectors, were also brought to bear. 

In the end, the cosmetic tax was removed from the Senate legislation.  In its place was put a 10% tax on tanning salons.  This tax is projected to raise about half the amount that the Botax was to provide, around $2.7B.  The actual numbers remain to be seen, but very often the projected numbers greatly overstate the realized amounts. 

The reality is that this tax will be borne by women; the (mostly) young ladies that use these salons, and the women who own them (two-thirds of these small businesses are owned by women).  There are real jobs at stake if the new tax reduces business and causes salons to close. 

The thought that this tax will eventually result in decreased skin cancer is a questionable assumption at best.  Tanning use, especially at a young age, has been linked to increased risks of skin cancers, including melanoma.  Annual expenses for treating skin cancer are reported at $1.8B, with $300M of that on melanoma.  However, the vast majority of these cancers are basal cell carcinomas in middle-aged and older fair skinned persons, whose cancers are related to lifelong sun exposure and advancing age.  Melanomas can occur in anyone, and don’t always appear on the skin. 

Linking the tanning tax revenue to lowering the cost of treating skin cancers is more than questionable, it is downright dubious.  What is not dubious is the correlation between lobbying effort (dollars) and results.  Though not exactly linear, a strong trend exists in this direction.  The International Smart Tan Network has around 3000 salons.  There are almost 7000 plastic surgeons, 12,000+ dermatologists, and at least another 10,000 assorted cosmetic surgeons/aesthetic practitioners.   None of them are starving, and many contribute to their respective societies.  Fair or not, one lesson is clear when it comes to lobbying efforts and policymaking:  if you don’t spend enough, you can get your hide tanned.

Reference: http://money.cnn.com/2010/03/24/news/economy/tanning_tax/index.htm?section=money_mostpopular&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_mostpopular+(Most+Popular)


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