July 14 2014
Carrie L. Lukas
photo credit: Getty Images
What’s the harm in hitting businesses with another tax and regulation? Conservative economists lecture about costs rippling through, hitting consumers and employees as well as business’s bottom-lines. But their estimates are just numbers on a screen, and the tax and regulations are always sold as advancing a noble cause and helping real people. And who is going to bother to see if those costs ever actually materialized anyway?
This was the prevailing view with ObamaCare’s many taxes, which were neatly tucked into the enormous two-thousand page legislation, unread by all but the most diligent of staff aids. Taxes on medical device manufacturers and tanning salons, like the increase Medicare payroll tax on those earning more than $200,000, were waved away as affecting the unsympathetic one-percent. They certainly weren’t supposed to impact ordinary Americans.
Yet now that ObamaCare is in force, we’ve seen the impact of the law’s many provisions in practice. Economists warnings that the employer mandate would encourage some businesses to shift employees to part-time status came true. So did their warnings that government mandates that insurance provide first-dollar coverage for more benefits would raise insurance premiums. Consumers saw that rather than the President’s promised thousand dollars of savings in health care costs, most middleclass Americans are paying more, and often much more. And the impact of those targeted ObamaCare taxes on companies and industries—surprise, surprise—aren’t just hitting those evil one-percenters. It’s middle-class America who is bearing the costs.
ObamaCare’s tax on tanning salons deserves particular scrutiny, given all the Left’s hand-wringing about an alleged “war on women.” Initially, Democrats writing the ObamaCare legislation planned to target another politically-incorrect service—elective cosmetic surgery—for a special, dedicated tax to help raise revenue to pay for all of ObamaCare’s new costs. But, as the Wall Street Journal reported, the influential (and deep-pocketed) American Medical Association objected, so Democrats re-aimed at the indoor tanning industry, singling it out for a 10 percent tax on all UV tanning services sold.
Women own most tanning salons, make up nine out of ten salon employees, and also account for the majority of their customers. Defenders of the tax argued that the tax would be costlessly absorbed by profitable salons, or passed on to the costumers who had the disposable income to pay a little extra. Yet that’s not how it’s worked in the real world. The industry reports that the number of tanning salons has fallen from 18,000 in 2009 to 10,000 today, and 64,000 jobs have been eliminated in the process.
One can debate on whether tanning services deserve to be singled out for a “sin tax” like cigarettes, but you can’t ignore that there is a real price being paid for these taxes, which come in the form of fewer jobs and fewer women-owned businesses. Washington pols should also take note that the tanning tax has produced just one-third of the revenue for the government than policymakers had estimated it would when they drafting the law. Less tax revenue is another consequence of squeezing businesses out of existence.
Medical device manufacturers have also reported reducing hiring and laying off workers, to the tune of thousands of lost jobs and thousands more to come, because of the new taxes levied under ObamaCare.
The American people should take note of what’s happening in these industries and keep it in mind as Washington presents its next round of revenue raisers and regulations which they say will be harmless while helping funded needed programs and advancing key causes. There may be real beneficiaries to such government intervention, but there are real costs to, which are just as real and ought to be acknowledged—rather than brushed away.
Carrie Lukas is managing director at the Independent Women’s Forum.