by Tom Steward
It’s that time of year again. Thousands of Minnesotans begin implementing evacuation plans to temporarily relocate somewhere south and warm. Before embarking, many make a preemptive appointment in a tanning facility to ramp up their exposure to ultra violet (UV) rays in advance. This winter, however, traveling tanners will have to look harder for a place to catch some rays — and not just in the frozen north.
Fourteen percent of indoor tanning facilities in Minnesota have gone out of business since 2009, according to the Indoor Tanning Association (ITA). The number of professional indoor tanning salons registered with ITA in Minnesota has plummeted from 477 to 419 in less than two years. In the industry’s view, it’s no coincidence the store closures and layoffs came so soon after the federal government targeted tanning salons for tax hikes. “Once again we have our government trying to control our behavior,” said John Overstreet of the Indoor Tanning Association. “You can’t just pick out an industry because someone views them some way and try to tax them into submission. That’s just crazy.”
While the economic downturn has undercut consumers’ discretionary spending, the industry places more blame on the ten percent excise tax imposed as part of the Patient Protection and Affordable Care Act. The one—two punch of the untimely health care act tax and sour economy wiped out 16 percent of tanning parlors nationwide — a loss of 3,100 businesses and 24,000 jobs. Three-quarters of tanning operations are owned by women which is three times the national average for other businesses.
“Basic economics tells you that you can’t tack ten percent on your prices without affecting demand. They’ve seen people cancel their packages, it’s definitely impacted demand and the number of customers and profitability of these businesses,” Overstreet told the Freedom Foundation of Minnesota. The tanning tax took effect in July 2010, the first tax imposed under the Obama administration’s health care reform legislation with 81 new IRS agents to enforce it. Congress estimated the excise tax on the estimated 25,000 professional tanning salons in business back then would generate $2.7 billion in revenue over ten years. The tax has raised about $37 million in the first half of the current fiscal year, putting it on course to generate less than half the $200 million in revenue projected by the Congressional Joint Committee on Taxation for the first full year of collections.
Read the rest here.If you enjoy the content at iBankCoin, please like our Facebook page