NTF Issue paper: cong150.doc. 9-18.

BACKGROUND. About 7.8 million adult women and 1.9 million adult men in the U.S. tan indoors, according to the American Academy of Dermatology. Desperate to find funding for his socialist Obama Care plan, Pres. Obama included in his bill new taxes on several services, including a 10% excise tax on tanning salons. Ostensibly to fight skin cancer, he actually sought to raise $2.7 billion by 2019, which will not happen. Initial proposals to tax botox treatments sparked strong opposition from the dermatologist lobby, so Obama legislators attacked a weaker industry. The tax took effect before the IRS could develop and communicate plans on how to collect it. By 2015, the IRS reported collecting only $78 million. The most recent White House Office of Management and Budget numbers predicted annual tax revenue of only between $86 million to $88 million in each of the next 5 fiscal years. Anticipated revenue undermined further by a rapidly shrinking tax base caused partly by the tax itself. The tax is a nanny state attempt at health policy.

THE BILL. S. 2600, the Tanning Tax Repeal Act of 2018, sponsored by Sen. Rand Paul (Ky.) and now in the Senate Finance Committee, would repeal the excise tax on indoor tanning services. The House of Representatives in 2017 already voted to terminate this tax. It has failed to accrue the amount of revenue Obama estimated, only one-tenth of 1%. President Trump supports repeal. Important leaders in his administration likewise offer support: Tom Price, head of HHS, and VP Mike Pence. The tax disproportionately impacts women who tan and who constitute the majority owners of these salons. According to the Suntanning Association, women own 70% of U.S. tanning salons, compared to an average of 26% of all other businesses. Women also account for approximately 95% of tanning-salon staffs, and 75% of customers are female. The bill would end nuisance regulations that require adults to sign forms each 6 months acknowledging safety risks of tanning beds.

HARMS SMALL BUSINESS. The tanning industry declares that this tax has forced over 9,600 small businesses to close, half the industry, and ended 95,000 jobs. $1.6 billion in lost wages. The American Suntanning Association (ASA), a trade group that represents industry wholesalers and about 1,000 tanning salons, showed research proving 50% of salons ending business. In 2009, the industry employed over 164,000 people, according to the ASA; in 2015, it employed only about 83,000. Those closures cost the U.S. Treasury revenue and involve countless SBA loan defaults. The upstate New York tanning salon chain Tanning Bed Inc. filed for bankruptcy protection in December, 2014, blaming the tax. This Buffalo, N.Y. chain later closed all 31 locations. The Wall Street Journal found that a tanning salon franchise in Florida defaulted on 41.1% of its federal small-business loans, which the franchise owner attributed to the burden of the new tanning tax. According to the Heritage Foundation, 19,000 small businesses have suffered from the tax. Those businesses spent an average of $74 an hour to comply with federal tax paperwork burdens, according to a factsheet distributed by the National Federation of Independent Businesses. Obama Care has given the IRS more power than ever to harass and intimidate individuals and businesses unaware of this taxing authority. When a tax targets a good or service, increasing its cost, many consumers will seek substitutes. The tax has given incentives for some to use tanning beds in unregulated venues like gyms and private homes, risking harm. As an unintended consequence, the 10% tax led to a large increase in non-salon tanning in apartment complexes, home sun beds, and unregulated units in non-salon locations, places without professional operators trained to properly set exposure times to minimize the risk of sunburn. The tax also includes a large crony capitalist loophole, exempting “qualified physical fitness facilities.” Congress and the IRS decided to give health clubs a strong competitive advantage over other small businesses, like salons that offer tanning.

TAKE ACTION NOW. The 10% tan tax is fiscally irresponsible and totally ineffective. Send a loud message to Sen. Ben Sasse to vote YES. Tell him that the Senate already has plenty of support for repeal. This tax must disappear before additional businesses fail and jobs disappear. Contact NTF at netaxpayers@gmail.com for Senate contact information.

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