Obamacare Tanning Salon Tax Kicks In, Violates President’s Pledge

Published June 16, 2010

The cost of an indoor tan at the local salon or health club is scheduled to become more expensive as a new federal excise tax goes into effect on July 1, compliments of the federal healthcare overhaul law.

It will be the first of many tax increases or new taxes in the “Obamacare” bill to take effect. Contrary to President Obama’s repeated campaign pledge to raise taxes only on the rich, any user of tanning services will pay an additional tax to Uncle Sam.

“In its haste to pass healthcare reform legislation last winter and at the urging of a wealthy special interest group—the American Academy of Dermatology —the Congress included a 10 percent tax on indoor tanning services in the final healthcare reform bill,” said John Overstreet, executive director of the Indoor Tanning Association (ITA).

Money for Treating Skin Cancer
Congressional backers of the bill stated these tax proceeds will be used for healthcare costs associated with skin cancer. They also said the tax will raise tanning costs and discourage some young people from using the service.

“Our proposal will deter the use of tanning beds by young Americans, reduce the risk of exposure to cancer, and save lives,” U.S. Senator Richard Durbin (D-IL) wrote to constituents who contacted his office regarding the tax.

Normal Process Skirted
“This tanning tax was not drafted by congressional staff and did not go through the normal legislative vetting process or any committee consideration,” said Overstreet. “As a result, it is poorly drafted, will be extremely difficult to collect, and will harm thousands of small businesses and affect millions of consumers, mostly working and middle-class women.

“What is next? Are these same special interests going to force the government to tax us for going to the beach and then subsidize sunscreen?” Overstreet said. ITA calls the new tanning tax “regressive and punitive as well as outrageous” and is running an Internet campaign to repeal the tax at http://www.repealtantax.com.

A 2004 study by Wolff System Technology Corp., a leader in the indoor tanning bed industry, found users of indoor tanning services are predominantly female (70 percent), more than 25 years of age (70 percent), and light-skinned. The demographics have expanded since a 1996 survey when almost all of the users were “college-age females.” 

The 10 percent tanning tax was added to the final healthcare bill at the last minute, while a 5 percent tax on Botox treatments— the “Bo-Tax”—was removed. Critics of this tax switch argued those receiving Botox treatments have higher average incomes than those who use tanning services.

President Backtracks on Promise
Obama signed the healthcare overhaul bill into law in March. During the presidential campaign he pledged, “Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.”

“He now claims his promise applied only to income taxes,” said John Kartch of Americans for Tax Reform. “Obama and his congressional allies expect the tanning tax to raise $2.7 billion over 10 years. There is no exemption for families making less than his initial campaign pledge.”

A study by ATR found the tanning tax is the first of seven healthcare overhaul taxes that, when fully implemented, will violate the president’s initial campaign pledge.

John W. Skorburg ([email protected]) is a lecturer in economics and finance at the University of Illinois at Chicago and associate editor of Budget & Tax News.

Internet Info

Americans for Tax Reform’s list of Obamacare taxes on persons earning less than $200,000 a year ($250,000 for couples), along with implementation dates: http://www.atr.org/obama-sign-massive-tax-hike-working-a4681.