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The Tanning Tax

July 5, 2010

A 10% levy on tanning is set to transpire soon in an attempt to feed the federal government an estimated 2.7 billion in, supposedly, needed funding. The comedy is of course in their faulty economics.

The bill differentiates between tanning salons and fitness centers that offer tanning packages. Tanning salons, like that of Sun Tan City or Solar Planet, are required to incorporate the 10% tan-tax within their pricing system whereas fitness centers are excluded. This differentiation could be understood as a discrete method of redirecting would-be tanners from the salons, to the gym, in hopes to increase the public’s health. Yet, the 2.7 billion in anticipated funding does not fully account for the economics of substitution. Being homogeneous in nature, tanners will likely just tan at the gyms to avoid the 10% tax.

The absurdity of the whole situation comes from the fact that the IRS has anticipated (and prohibited) the most common course of action for a tanning salon i.e. offering yoga classes or some other form of exercise in an attempt to take advantage of the loophole. Read more

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