Some states have already slapped taxes on blueberries, illegal drugs and fur clothing. But as budget shortfalls grow, state legislators are looking for even more devious ways to steal your money.
A Little Off the Top
In an attempt to balance their budgets, states like Michigan and Nebraska are considering taxing a haircut, by extending the state sales tax to include personal grooming services.
“These states are expanding the services they’re taxing, and a haircut is considered personal grooming and can be seen as a luxury item,” said Kim Rueben, a senior fellow at the Urban Institute. “And while you might not think a haircut is a luxury item, you could always do it cheaper or at home.”
Pulling a Tax Out of a Hat
Lawmakers in Maine are going after children’s entertainment to make a little extra money for the state.
A bill proposing a 5% state tax on a slew of things, including comedians, clowns, jugglers, ventriloquists, petting zoos, paintball and even haunted hay rides will be voted on this summer and would go into effect in January 2011.
But purveyors of such services are afraid their profits will disappear. Angelique Steelgrave, who works with her husband as a full-time magician, said that this tax will have a huge impact on small entertainment businesses like hers.
“We hate the idea,” she said. “Not a lot of businesses these days have the luxury of raising prices 5%, and in a lot of cases, this could be a serious amount of money we would either have to charge clients or eat ourselves.”
Up, Up and Away
Kentucky is looking to raise $350 to $400 million a year by taxing high-end services such as limousine and hot air balloon rides, golf green fees, private landscaping, armored car services and professional laundry services.
But opponents of the bill are concerned it will stifle some small businesses.
“I know there’s very little I can do about it, but any tax is going to have a negative impact and I’m almost certain we will lose customers,” said Brian Beazly, owner of Louisville-based Balloon Odyssey, which offers rides ranging from $195 to $375.
Hair of the Dog
A tax on pet grooming and horse training accompany a long list of other odd levies lawmakers in Michigan (again) have proposed to bridge the state’s budget deficit. Plumbing, fur storage, beauty parlors, funeral services, diaper services, massages, bowling, coin-operated video games, meat slaughtering, movie tickets, zoos and pest control are also on the state’s hit list.
“We’re having a hard enough time since our service is a luxury and not a necessity — this is not the time to do something like this,” said Linda Knobelsdorf, the owner of a small pet grooming company in Michigan.
A Real Stretch
Missouri’s long-standing tax on yoga has come under fire in recent months after the state decided to re-enforce the levy despite opposition to a tax on what many yoga enthusiasts view as a spiritual practice.
Yoga is currently classified as a recreational service in Missouri and is taxed along with athletic events like Cardinal games and fitness club memberships.
But yoga studio owners and their customers argue that it’s part of a religion rather than a recreational activity.
“I understand the state needs money, but if anyone takes a minute to look at this, they will see that it’s just the wrong thing to do,” said Ken McRae, owner of alleyCat Yoga. “This is against the law. You cannot tax a religion, and by every definition, yoga is a religion.”
Trying to Play Cupid
Searching for your soul mate? Don’t go to Nebraska to find a date — the state might charge you for it.
In addition to a tax on the use of dating services, a whole slew of other odd services were in the running, including scooter and motorcycle repairs, shoe shines, reflexology, massages, tree trimming, taxidermy, fur storage, detective services, garment alterations, dance studios and armored car services. Getting your gun or camera repaired would have also cost you more.
That free breakfast at Holiday Inn Might not be free much longer.
In Tennessee, the General Assembly is considering applying the state’s sales tax to complimentary meals provided at hotels as part of its “sale for resale” initiative, which would tax items included as part of a service.
Customers would receive their free breakfast, but might be surprised to see a tax charge added onto their bill, if that hotel decides to pass along the cost.
Opponents of the tax argue that meals could actually end up being double-taxed, according to the Tax Foundation, since the cost of providing them is usually taken into account when a hotel determines its room rates, which are already subject to the state’s sales tax.