…otherwise, Senator Reid’s “manager’s amendment” to the health care reform bill would be a “wash” for them. A snow-day CQ story by Richard Rubin exposed the sillier side of how a health care reform bill is made (emphasis added):
The amendment also would replace a proposed 5 percent excise tax on cosmetic surgery with a 10 percent excise tax on indoor tanning salons. The new tax raises $2.7 billion, instead of the $5.8 billion raised by the cosmetic-surgery tax, or “Bo-tax,” as it was known.
“Basically, the docs, to get their support, didn’t want Bo-tax, but they’re fine with tanning,” said Baucus, who specifically mentioned the support of the American Medical Association. “Tanning’s a bad practice. It causes cancer. Tanning beds should be taxed.”…
The amendment also slightly changes the proposed excise tax on high-cost health insurance plans. Longshoremen would be specifically added to the list of high-risk professions that get a higher threshold before the 40 percent tax takes effect.
This Dow-Jones story by Martin Vaughan offers an “interesting” (ok, silly and ridiculous) justification for removing the cosmetic surgery tax and describes the “interesting” (ok, silly and ridiculous) new debate it’s spawned between the plastic surgery lobby and the indoor tanning lobby (emphasis added):
Senate leaders dropped from the bill a 5% tax on all elective cosmetic surgeries that had been in an earlier version. Allergan Inc. (AGN), along with Medicis Pharmaceutical Corp. (MRX), and other firms lobbied against that tax, arguing that it was unfair to working women…
The indoor tanning industry has been fighting its own public relations battle as the U.S. Food and Drug Administration in recent weeks has sharpened its warnings about the risks of ultraviolet rays from indoor tanning beds. The tanning excise tax would raise $2.7 billion over 10 years for federal coffers.
John Overstreet, executive director of the Indoor Tanning Association, lashed out at plastic surgeons in a statement.
“It is not surprising that one primarily cosmetic business is trying to throw another under the bus by transferring a tax from rich doctors and their wealthy customers to struggling small businesses,” Overstreet said. “The irony is that ultraviolet light at least has proven health benefits where botox treatments have none.”
OK, let’s just call it the quest for the perfect “you look maaa-velous” (and obviously have too much discretionary income but not enough lobbying influence) tax.
And I do not normally find myself agreeing with the Wall Street Journal editorial page (I’m always calling for taxes to be increased after all), but when even they find themselves complaining about tax preferences that are based on political lobbying power rather than economic merit, I have to say they’re right:
Start with the special tax carve-outs included in the “manager’s amendment” that Harry Reid dropped Saturday morning. White House budget director Peter Orszag has claimed that the bill’s 40% excise tax on high-cost insurance plans is key to reducing health costs. Yet the Senate Majority Leader’s new version specifically exempts “individuals whose primary work is longshore work.” That would be the longshoremen’s union, which has negotiated very costly insurance benefits. The well-connected dock workers join other union interests such as miners, electrical linemen, EMTs, construction workers, some farmers, fishermen, foresters, early retirees and others who are absolved from this tax.
In other words, controlling insurance costs is enormously important, unless your very costly insurance is provided by an important Democratic constituency.
The Reid bill also gives a pass on the excise tax to the 17 states with the highest health costs. This provision applied to only 10 states in a prior version, but other Senators made a fuss. So controlling health costs is enormously important, except in the places where health costs need the most control.
If only the WSJ editorial page (and those who normally agree with them) would see how their logic might apply to the large tax preferences (really, “tax entitlements”) granted to the oil and gas industry/lobby, or to the farm industry/lobby, or to seniors (who don’t even need lobbyists but still have a pretty great one in the AARP).
I’ll have more to say on the not-so-silly aspects of tax policy in the House and Senate health reform bills later this week.