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Rumor Versus Fact – Hidden Sin Taxes in the Health Care Reform Bill

The Health Care Reform Bill has caused a stir in the media, towns, and even any number of incidences of discrimination and violence. More than anything else, it has created more in the rumor mills than many other similar incidences in history, including the recent rumor that more Sin Taxes are hidden within the text of the reform bill itself.

You can read the text of the reform (as provided by CNN.com) at http://democrats.senate.gov/reform/patient-protection-affordable-care-act-as-passed.pdf it requires a pdf viewer such as Adobe Acrobat Reader. It is true that some argument can be formed regarding the site domain posting the information; however, the Superintendent of Documents (pkisupport@gpo.gov can be emailed for verification of authenticity) certifies it.

A little more information regarding Sin Taxes – historically, they have been an easy way to make money off vices. Quoted in the New York Times – “The honest way to raise more revenue would be to raise income tax rates,… But it is more politically attractive to tax these kinds of things. No one can get mad at you for taxing people who drink too much.” (Rampell, 2010, para. 8).

Particularly, the goal is to find things that people “should not do” and only penalize those people – gambling, smoking, drinking, prostitution, etc – garnering support from advocates against the habit. For example, taxes on alcohol have support from Mothers Against Drunk Driving (MADD) and tobacco has support from organizations such as the American Health Association. For a short history of Sin Taxes, you can read Altman’s article at Time.com (http://www.time.com/time/magazine/article/0,9171,1889187,00.html).

Today the fight against the common drugs have lost their social appeal and uproar – the “We should smoke…” has lost most of its fire with the increase of “smoking” related illnesses and alcohol has had better days. The world has found a new focus for Sin Taxes, based on our new health initiatives, unhealthy foods and habits – such as unhealthy-sugary-caffeinated beverages, fast foods, candy, and even tanning. However, the Health Reform Bill itself only addresses one unnecessary luxury in the list of unhealthy American habits – tanning.

The bill did not start out with this particular focus; the first address was towards unnecessary cosmetic surgery. Tanning is just another compromise on the endless lists of compromises that occur in Congress. The text from the online file are present at the end, and if you ask people who have “heard” about this section of the document, they may tell you the final goal is to eliminate the use of indoor tanning by 2014 – this is not the case, as stated in the documentation.

Is it a Sin to tax the sins of American citizens to fund the expenses that are incurred by all citizens? That question is left to the personal ethics of each individual; however, each state can add sin taxes as they vote them into effect. Ultimately, it is a matter of state as much as it is a matter of federal government choices.

”CHAPTER 49-COSMETIC SERVICES

”Sec. 5000B. Imposition of tax on indoor tanning services.

”SEC. 5000B. IMPOSITION OF TAX ON INDOOR TANNING SERVICES.

”(a) IN GENERAL.-There is hereby imposed on any indoor tanning service a tax equal to 10 percent of the amount paid for such service (determined without regard to this section), whether paid by insurance or otherwise.

”(b) INDOOR TANNING SERVICE.-For purposes of this section-

”(1) IN GENERAL.-The term ‘indoor tanning service’ means a service employing any electronic product designed to incorporate 1 or more ultraviolet lamps and intended for the irradiation of an individual by ultraviolet radiation, with wavelengths in air between 200 and 400 nanometers, to induce skin tanning.

”(2) EXCLUSION OF PHOTOTHERAPY SERVICES.-Such term does not include any phototherapy service performed by a licensed medical professional.

”(c) PAYMENT OF TAX.-

”(1) IN GENERAL.-The tax imposed by this section shall be paid by the individual on whom the service is performed.

”(2) COLLECTION.-Every person receiving a payment for services on which a tax is imposed under subsection (a) shall collect the amount of the tax from the individual on whom the service is performed and remit such tax quarterly to the Secretary at such time and in such manner as provided by the Secretary.

”(3) SECONDARY LIABILITY.-Where any tax imposed by subsection

(a) is not paid at the time payments for indoor tanning services are made, then to the extent that such tax is not collected, such tax shall be paid by the person who performs the service.”.

(c) CLERICAL AMENDMENT.-The table of chapter for subtitle D of the Internal Revenue Code of 1986, as amended by this Act, is amended by inserting after the item relating to chapter 48 the following new item:

”CHAPTER 49-COSMETIC SERVICES”.

(d) EFFECTIVE DATE.-The amendments made by this section shall apply to services performed on or after July 1, 2010.”

(http://democrats.senate.gov/reform/patient-protection-affordable-care-act-as-passed.pdf)

That section is designed to replace this section –

“CHAPTER 49-ELECTIVE COSMETIC MEDICAL

PROCEDURES

”Sec. 5000B. Imposition of tax on elective cosmetic medical procedures.

”SEC. 5000B. IMPOSITION OF TAX ON ELECTIVE COSMETIC MEDICAL

PROCEDURES.

”(a) IN GENERAL.-There is hereby imposed on any cosmetic surgery and medical procedure a tax equal to 5 percent of the amount paid for such procedure (determined without regard to this section), whether paid by insurance or otherwise.

”(b) COSMETIC SURGERY AND MEDICAL PROCEDURE.-For purposes of this section, the term ‘cosmetic surgery and medical procedure’ means any cosmetic surgery (as defined in section 213(d)(9)(B)) or other similar procedure which-

”(1) is performed by a licensed medical professional, and

”(2) is not necessary to ameliorate a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or disfiguring disease.

”(c) PAYMENT OF TAX.-

”(1) IN GENERAL.-The tax imposed by this section shall be paid by the individual on whom the procedure is performed.

”(2) COLLECTION.-Every person receiving a payment for procedures on which a tax is imposed under subsection (a) shall collect the amount of the tax from the individual on whom the procedure is performed and remit such tax quarterly to the Secretary at such time and in such manner as provided by the Secretary.

”(3) SECONDARY LIABILITY.-Where any tax imposed by subsection

(a) is not paid at the time payments for cosmetic surgery and medical procedures are made, then to the extent that H. R. 3590-755 such tax is not collected, such tax shall be paid by the person who performs the procedure.”.

(b) CLERICAL AMENDMENT.-The table of chapters for subtitle D of the Internal Revenue Code of 1986, as amended by this Act, is amended by inserting after the item relating to chapter 48 the following new item:

”CHAPTER 49-ELECTIVE COSMETIC MEDICAL PROCEDURES”.

(c) EFFECTIVE DATE.-The amendments made by this section shall apply to procedures performed on or after January 1, 2010.”

(http://democrats.senate.gov/reform/patient-protection-affordable-care-act-as-passed.pdf)

Reference

Rampell, C. (April 16, 2010). For Cash-Strapped States, Sin is Sure Lucrative. The New York Times. Retrieved from http://www.nytimes.com/2010/04/18/weekinreview/18rampell.html?hp

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