Opinion and Economic Analysis

HICKS: A modest proposal: The SUN tax of 2010

July 10, 2010

The recently passed health care bill levied a hefty 10-percent tax on—of all things—tanning bed visits.

More accurately, the legislation calls for a 10-percent excise tax (reportable quarterly on IRS Form 720) for indoor tanning beds employing ultraviolet light. Of course, an exemption is made for any medically prescribed purpose such as skin ailments or for seasonal affective disorder. (Need I predict a jump in prescriptions for tanning beds?)

The problem is that this tax fails every single criterion of effective tax policy. It is narrow, easily avoided, suffers high administrative costs, and distorts consumer and producer behavior. It is downright silly, but I have a remedy.

In order to pay for the burgeoning federal debt, I think Congress should expand the scope of this tax. This could be done within a fairly small bill, perhaps passed during the shortening days between Nov. 3 and the seating of the new Congress in January. Many members of Congress will need this time to focus on their new careers, and my modest proposal will take little of their precious job-search time.

I propose to simply eliminate the language taxing only indoor tanning beds. In its place, we can substitute the phrase “levies a 10-percent excise tax on all tanning activities.” As with the current tax, this could be reported on a “fair market value” basis for all tanning services. I propose the Supplemental Uniform Non-entity, or SUN, tax.

The SUN tax would provide a huge government windfall. For each 30 minutes spent in the sunshine, each American could apply the fair market value for a 30-minute tanning visit (about $15). So, that’s a $3 SUN tax for each hour spent outdoors. Think of the debt-defying benefit of this tax. If you mow the lawn (cha-ching!), $1.50 to Uncle Sam; walk the dog (bam!), 5 cents to the IRS; take out the trash (voila!), two bits to the tax man. But it gets better. Three hours of Little League play is a whopping 9 times 3 times $3, or $81 bucks, not counting coaches or spectators, (unless the 10-run lead rule comes into play, shortening the game). There’s no end to the revenue availability. The SUN tax can fix all our debt problems, with only a few modifications.

We’d have to exempt from the tax anyone working on solar panels. Also, farmers should expect their own “Farmer Tan Relief Act.” And, yes, we have to have some enforcement. That would mean an IRS agent on every street, and a tan registry. It simply wouldn’t do for a melanin-challenged individual to suddenly emerge like George Hamilton, with a radiant glow, without paying the SUN tax.

This is real stimulus. And one added benefit: The tax would slow the movement of folks from the Midwest to the Sun Belt.•

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Hicks is director of the Center for Business and Economic Research at Ball State University. His column appears weekly. He can be reached at cber@bsu.edu.

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