The Tale of Two Taxes

Two taxes are getting attention in Minnesota these days.

The first is a cosmetic surgery tax.

On the surface I like this tax. It’s crafted so that only voluntary or elective cosmetic surgery is taxed. The logic behind it is – if you have money to get botox, you can slide a little sales tax revenue over to the Governor.

But the tax fails for me for one big reason. As I understand it, the majority of elective cosmetic surgery patients are women (the article indicates 90%, but I’ve also heard 78%). As well, the average cosmetic surgery patient apparently has an average income of $60,000. So, it seems this tax would have a disproportionate impact on women and, within that, middle class women.

Count me out.

The second is a mileage tax.

Within the world of taxes, I love, love, love this tax.

First, it’s fair. It has a voluntary component. You are taxed to the extent that you want to be taxed. People can choose to drive fewer miles than they do.

Second, it has a punitive component that holds the potential to shape behavior. If folks want to commute and super-commute, they are free to do so, but their impact on the earth and on the infrastructure is reflected in the taxes they pay. Some folks will be encouraged to drive fewer miles.

Third, it is a necessary change. Gas tax revenues are declining. That model has become antiquated, and does not seem to support infrastructure maintenance and other transportation costs. We need a new model.

However, I would change the proposal in a few ways.

Rather than going the technical route and following cars as they travel about (something that will make adoption almost impossible), I would just set up stations where folks would, once a year, pull in and report their mileage. We did it for emissions checks, we can do it again.

Second, I would create more than two tiers. I would exempt hybrids from the tax completely. I would create tiers for diesel, bio-diesel, highly efficient cars, efficient cars, inefficient cars and highly inefficient cars. Those in the highest category would be slammed. Pay up, earth killers!

The last thing that must be considered is how we tax those who must be taxed. Our current laws are replete with exceptions for small “businesses.” Those exceptions effectively create a loophole which allows citizens who are inclined to save a buck (even at the expense of what is right or fair) to create sham businesses so that their Hummer isn’t taxed as it should be. Those loopholes must be closed.