While the country and our politicians still argue over what the final health care bill will look like, there are a few interesting tax provisions as it currently stands. Perhaps the weirdest one (and I am not making this up), is that the bill calls for a 10% tax on tanning salons. I am not sure how this got written in. Perhaps the rationale is that tanning is “anti-health”, but if that were the case there are probably many products we should attach new taxes to. Maybe a Jagermeister tax? Those really pointy high heels also look dangerous to me, and it would not hurt my feelings if we taxed them.
Since I have not gone to a tanning salon since the Bee Gees were a top ten band, this tax does not bother me personally. And George Hamilton can probably afford a tanning tax surcharge. But there are a few other tax increases that do sound a bit painful.
• In 2013 the threshold for medical deductions is increasing from 7 ½% to 10%.
• There will also be a 2.3% tax on medical devices (excluding glasses, contacts, and hearing aids). I assume this will hit those pec and calf implants I have been dreaming of.
• The Medicare tax on household incomes over $250k increases from 1.45% to 2.35%. Whew!
• And here is another big one….. starting in 2013 there will be a 3.8% tax on net investment income. This is again a tax targeted at the rich – and will apply to individuals with income over $200k, and household incomes over $250k.
I will probably be pontificating a lot about taxes in this blog over the next few months. I am fortunate enough to be among the income group that is getting hit with a lot of tax increases, and despite the fact that I don’t like paying more taxes I do understand that some tax increases are inevitable and fair.
But I think the politicians have to be very careful about how they tax, as it could have unintended and serious consequences. The last thing we want to do is de-motivate people from investing in the economy. Hit people with too many taxes on their investments and they will quit taking investment risk. Investment fuels the economy, and right now we need everyone willing to pour a lot of fuel into companies to get them to invest in innovation and expansion, which will build jobs and result in more tax payers. It would be a shame if a tax on investment income actually shrunk the economy and resulted in a loss of taxes overall.