Sunday, June 19, 2005

Taxing Breasts

Don’t get breast implants in New Jersey. In 2004, New Jersey passed the first of what are often termed ‘vanity’ taxes or taxes on plastic surgery. Motivated by a desire to cash in on what legislators view as a luxury, New Jersey now levies a tax of 6 percent on medical procedures including nose jobs, hair transplants, chemical peels, liposuction and breast implants. The state exempts all procedures that are deemed medically necessary.

I see three serious problems with such action. First, what is deemed necessary by one person is a luxury for another. What about braces for your child’s teeth? Most well-to-do parents view braces as a necessity. However there are certainly parents across the nation, and even in New Jersey, that do not consider braces for the teeth as vital.

Second by taxing cosmetic surgery, New Jersey will simply drive a share of this activity to another state. For example surgeons charge patients between $10,000 and $20,000 for a hair transplant. Thus a balding man would save between $600 and $1,200 by driving across the border to New York or Pennsylvania to obtain those lovely locks. There is of course the likelihood that by passing such a tax, tax collections could actually decline. That is, at least a percentage of physicians in the state, sensitive to such taxes, will decide to move their practices across the border. Thus instead of collecting a tax on that “nose job,” New Jersey losses income taxes normally collected from the newly migratory physicians.

Finally, expansions in taxes such as this allow the state to continue on its overspending ways assuming that physicians do not re-locate. Thankfully, states have to compete. Unfortunately, New Jersey is becoming less competitive due to legislation such as this.

Ernie Goss

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