A Stitch in Haste

I first blogged about proposals to tax cosmetic surgery back in January. It was in that post that I first coined the "Penny in Your Pocket Rule."

Well, this particular application of the Rule remains alive and well (WSJ - $):

A number of states are considering taxing certain cosmetic surgery procedures, including face-lifts, tummy-tucks and Botox injections. The idea behind the taxes — dubbed "vanity taxes" or "Botaxes" by some — is to boost state coffers and raise revenue for government initiatives such as health care for poor children.
...
New Jersey passed the first cosmetic surgery tax law last summer. Since then, lawmakers in states including Texas, Illinois, Washington, Arkansas, Tennessee and New York have introduced bills or budget proposals to install similar taxes, although none of those states has passed the taxes into law.
...
The cosmetic-surgery taxes are part of a growing effort by states to tax all sorts of other aesthetic services, including tattoos, body piercing, tanning salon sessions and massages. Twenty-one states taxed tanning salons and 10 states taxed massages as of last July, according to the Federation of Tax Administrators, which tracks state taxes. Last year, Arkansas began imposing a sales tax on body piercing, tattoos and electrolysis.
...
No one knows for sure how many New Jersey patients are declining surgery or are going out of state for treatment since the law was passed. The tax hasn't generated as much revenue as New Jersey originally hoped. When the tax was signed into law last June it was expected to generate $24 million this fiscal year. The state now thinks the tax will only generate $7 million this year.

Note that last part. Now the Penny in Your Pocket Rule meets the Politics of the Warm Fuzzy Feeling. The tax didn't raise the revenue that was expected — but who cares? The politicians "did something" — the fact that it's something that's not working is irrelevant. And heck, at least a few "rich" got soaked in the process. (Or did they? Plastic surgeons insist that cosmetic surgery is a predominantly middle class service.)

As I blogged back in January:

Slap a tax on luxury cars, the rich will switch to luxury boats. Slap a tax on luxury boats and the rich will switch to jewelry. Slap a tax on jewelry and the rich will...well, you get the idea. ... We all know stories of people who, when the purchase is large enough, will cross state lines to take advantage of lower sales taxes. If the rich are "not deterred by a little sales tax" (sidebar — 6.5% is "little"?), then they're also not likely to be deterred by a little travel to a lower-tax state.

Hopefully this obnoxious idea will quickly flame out.

More thoughts at Government Bytes.