Recently, New Jersey Governor Chris Christie signed legislation calling for the elimination of the state’s 6 percent tax on cosmetic surgery procedures. This tax had been present since 2004 and was quite controversial.
The tax was on cosmetic surgery, cosmetic injections and fillers, dermabrasion, laser hair removal among other things. The states theory was that they should be able to profit on
sales of non-essential medical procedures much like any goods the consumer could buy at the mall. Unfortunately, the ramifications of this legislation were not fully understood. The state anticipated 20 million dollars of income annually. Only half of that materialized. It turns out, the state probably lost significant amounts of money by driving the cosmetic surgery patients across state lines to neighboring states where there was no cosmetic surgery tax. In so doing plastics surgeons, anesthesiologists, nurse anesthetists, operating rooms and surgery centers sat idle. The doctors, surgery centers and hospitals are all employers.
When they have no business, they don’t need employees. When there are fewer employees payroll taxes, and state income taxes are not collected. The state coffers ultimately suffer. The effects of taxation is complex, particularly when the good taxed is a luxury item available elsewhere tax free. Since 2006, only two years since the tax went into effect, the original author of the bill tried to remove it from New Jersey’s books. Not until 2011 were the lobbying efforts successful. When economic times get tough lawmakers will look to anything to fill the budget gaps. What will be taxed next: sugared cereal, True Religion jeans, orange juice, Starbuck coffee? Folks we need to keep our elected officials honest. Lets not spend more than we have and lets not budget for what income we expect to collect rather than actually collect.
