Question of the Month
April
2005
Which
states have imposed or are considering to impose a "vanity
tax" on elective cosmetic surgery?
Seeking ways to enhance revenues and
avoid across-the-board tax increases during tight fiscal situations,
policymakers in some states have begun to look to selective taxes and
fees. One such revenue-raising idea receiving attention this year is a
so-called "vanity tax" on cosmetic surgeries and procedures
that are considered elective. The tax is aimed at procedures ranging
from liposuction and Botox injections to breast augmentation and face
lifts.
While policymakers in several states
have started to talk about this tax, only three states have had
serious proposals considered. In September, New Jersey became the
first state, and as of March the only state, to tax elective cosmetic
surgeries and procedures. The 6 percent tax is expected to generate
approximately $25 million annually. Lawmakers in the state of
Washington are considering a proposal that would impose a 6.5 percent
plastic surgery tax, the revenue from which would be earmarked for
health insurance for children in poverty.
In Illinois, the state
comptroller has proposed a 6 percent cosmetic surgery tax. Under the
plan, the tax would be used to create a stem cell research institute.
The comptroller estimates the state would generate about $100 million
annually; that revenue would then be used to fund $1 billion in grants
and loans for stem cell research. If approved by the Legislature, the
measure will be placed on the ballot for final approval by voters in
2006.
In all three states, the proposed or
enacted "vanity taxes" exempt cosmetic surgeries that are
deemed "medically necessary." For example, reconstructive
surgery for burn patients and women who have undergone mastectomies
would not be subject to the tax. Concerns have been raised, though,
about how to interpret what is a medical necessity, as well as the
impact of the tax on women, who constitute more than 85 percent of
cosmetic surgery patients. Opponents also say the majority of people
having cosmetic procedures are not in the high-income range. According
to the American Society of Plastic Surgeons, research shows that 60
percent of people intending to have cosmetic procedures over the next
two years have incomes of between $30,000 and $90,000 per year.
For
more information on this or any other public policy issue, please call
630-925-1922 or complete the online
form for research services.
Return
to Question of the Month
For more information, contact:
CSG Midwest
