I'm sitting here in Seattle, reading my Sunday New York Times and wondering if my sore throat and aching head have damaged my capacity for logical thought. The article that got me going was Monica Davey's 'States Seek to Tax Services, from Head to Toe', which was accompanied by:
We live in an increasingly stratified economy and for the life of me, I'm wondering how taxing haircuts will improve it versus biting the bullet and deciding that taxes should be income based.
No one likes taxes. I certainly don't. But forgive my skepticism that taxing haircuts and pet-grooming and shoe repair (all mentioned in the article) is going to do anything other than penalize the service providers of such services. And they already were not making a lot of money to begin with!
Michigan is struggling with the issue of taxation of services and has been since 2007. Governor Jennifer Granholm wants to tax 100 service areas (on top of the 26 areas already taxed) at 5.5% and then lower sales tax to that value from 6%. But small business owners, like Pete Tomassoni, who is quoted in the article as saying that taxing his $3 bowling games is a "terrible idea" have seen downturns in their businesses because of the poor economy.
Let's put it in perspective. I know some really wealthy people. Like the kind of people who have a bowling alley in their home. Or the kind of people who have theaters in their home and don't mingle at AMC Cinemas. Or the kind of people who pay their hairdresser in NYC to fly down and cut their hair in their house on Miami Beach. (They pay cash and put the stylist up on South Beach. I don't think they're paying that service tax for the haircut, do you?) So the legislature in their state can make new tax laws until the cows come home but these people, the ones with scads of money, are not going to be affected for the most part. But my hairdresser and yours? Or Mr. Tomassoni in Iron Mountain, Michigan? When people start to bowl less or go another two or three weeks between haircuts or pay the one time sales tax to get the shears to cut their own or their child's hair, you tell me what that will do to tax revenues in the long term. You tell me.
