This content is provided by the Americans for Tax Reform Foundation.

Tax Provision

The Excise Tax on Indoor Tanning Services, colloquially known as the “tanning tax,” imposes a 10% excise tax on ultraviolet tanning bed services. Tanning bed services included as part of a gym membership, and the sale of phototherapy treatments, spray tans and tanning lotions are exempt from the tax, which became effective on July 1, 2010.

ATRF Analysis

Few industries can absorb a 10 percent tax hit, which inevitably leads to higher prices and fewer customers. The indoor tanning industry is no exception.

A Northwestern University study found that, among Illinois tanning salons, 80 percent pass the full costs of the tax to their customers.

An estimated 19,000 tanning businesses (which employ 160,000 Americans) are subject to the tax. Besides the pages of jargon-filled, confounding regulations and quarterly reporting requirements businesses must wade through to comply with the tax, they are also being aggressively targeted by the IRS, which hired 81 agents to enforce the tax (cost to taxpayers: $11.5 million).

According to industry estimates, the majority of tanning facilities are owned by women.

The tanning tax is an example of a sumptuary, or “sin,” tax, designed to punish those who engage in activities the government deems “bad.” It is also a “luxury” tax, designed to soak a small, politically-vulnerable group of taxpayers for more government revenue.

Both of these policy rationales are contrary to a neutral (and just) tax system, which does not attempt to impose its concept of right or wrong through the tax code and which treats all taxpayers equally.

The tanning tax is a harmful ploy to fund the government’s new, $1.76 trillion health care leviathan. It negatively impacts small businesses, their many employees, and middle-income Americans.

10 Year Cost to Taxpayers

Joint Committee on Taxation: $2.7 billion

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