Tax Break: The TurboTax Blog » sin tax

Nicotine Nation: Which States Import the Most Cigarettes Illegally [Infographic]

joshritchie — Fri, 15 Mar 2013 08:04:59 +0000

With the variation in state cigarette taxes across the United States, incentives to smuggle cigarettes into high tax states is on the rise. Our infographic looks at the variations of state cigarette taxes and the top illegal importing states.

Infographic by Column Five Media

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Tanning Tax: Summer Bummer?

Michael Rubin — Tue, 05 Jun 2012 20:45:33 +0000

Aaaah summer’s in the air. Time to get that sun-kissed skin. Well not so fast. Did you know you will pay an additional 10% federal excise tax if you go to a tanning salon to get that extra glow (guess that’s why Snooki said she tans naturally now)? Michael Rubin gives us the 411 on the Tanning Tax.

What is a tan?

When your skin gets darker.

No, I mean for purposes of the tanning tax, what’s a tax?

The health care reform package created several new taxes, many of which phase in over time. However, the tanning tax became effective immediately, back in 2010. Here are the answers to some frequently asked questions about the tanning tax.

According to the IRS, a taxable indoor tanning service is a “service employing any electronic product designed to incorporate one or more ultraviolet lamps intended for the irradiation of an individual by ultraviolet radiation, with wavelengths in air between 200 and 400 nanometers, to induce skin tanning.”

Are there any tans, tanning services, or tanning products which are exempt from the tax?

Phototherapy is exempt from the tax if it is performed by a licensed medical professional. Phototherapy is done in the treatment of a specific list of diagnoses including seasonal affective disorder, neonatal jaundice, and sleep disorders. To be exempt from the tanning tax, the phototherapy must be performed at the professional’s office – it can’t be done at your home or any other location.

In addition, there is no tanning tax on spray tans or suntan lotions (but you’ll probably pay your regular state and/or local sales tax on the purchase).

There is some good news. There’s still no tax for tans earned the old-fashioned way–at the beach. Not yet, anyway.

How much is the tanning tax?

The tanning tax is 10% of the amount charged for the tan. So if you pay $25 for a tanning service, the tax is 10% of $25, or $2.50.

How do you pay the tanning tax?

Similar to a sales tax, you pay the tax at the time you buy the service. The tanning tax simply increases the amount you owe for the tan.

What if I wasn’t charged the tanning tax?

It’s possible that the salon owner decided to include the tanning tax in the price you paid for your tan. Regardless, the tanning tax will be ultimately paid to the IRS by the tanning salon owner; you, as the individual recently bronzed, have no responsibility for this tax after you walk out of the building.

Why is there a tanning tax?

The tanning tax was created for two commonly stated reasons. First, to provide additional revenue to the government for the specific purposes of paying for health care reform. Second, to provide a negative incentive (didn’t burn the “New Jersey Tanning Mom”) for the use of tanning salons, as there have been studies showing their use has long-term harmful health consequences. Of course, these two goals work against each other somewhat; since the use of tanning has gone down somewhat due its increased cost, the amount of revenue raised for health care reform has fallen quite short of budget estimates.

Will the tanning tax be repealed?

Although there have been efforts to repeal the tax, repeal’s near-term passage is quite unlikely given our divided Congress. Of course, should the U.S. Supreme Court find the Health Care Reform Act unconstitutional, one possibility is that it would throw out the entire law, presumably including the tanning tax.

Happy summer!

It’s National Donut Day! Glad We Don’t Have Denmark’s Fat Tax

joshritchie — Fri, 01 Jun 2012 21:00:40 +0000

Taxes on items like cigarettes, soda, alcohol, and even marijuana called “sin taxes” have been imposed in the United States, but what about a “Fat Tax” on items containing certain levels of saturated fat? Could this happen in the United States? In the spirit of National Donut Day we wanted to share our infographic about Denmark and its “Fat Tax”. So before you chow down on a dozen donuts today, think about how much you would pay in taxes to enjoy those deep fried sugar confections if the United States approves such a tax.

Interactive by Column Five

What do you think about a “Fat Tax”? Do you think it will help decrease obesity in the United States?

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The Vices of March: Sin Taxes Meet March Madness

joshritchie — Thu, 01 Mar 2012 22:09:08 +0000

Whether we’re talking about the Super Bowl, Fantasy Football, or March Madness, we all may have to pay “sin tax” on everything from those “legal” gambling wagers to the kegs of beer consumed while enjoying those sports. With March Madness and St. Patricks Day (one of the biggest holidays for beer consumption) all in the same week, gambling casinos and alcohol companies can expect to generate a hefty amount of tax revenue. Check out our infographic which shows just how much revenue is generated from March Madness and “Sin Taxes”.

Interactive by joshritchie

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Taxes On America’s Favorite Beverage: Soda

joshritchie — Tue, 16 Aug 2011 16:56:19 +0000

35 states have an additional sales tax on soda, a rate added to the general food tax rates on food and beverage products. A soda tax can be compared to a sin tax, however how high are soda tax rates and do they have the same effect sin taxes do on preventing unhealthy behavior? Will adding a soda tax potentially help raise enough revenue to put a significant dent in our nations deficit? These are some of the questions we want to answer, so let’s dive in.

Cigarette Taxes In Photos

joshritchie — Mon, 01 Aug 2011 17:05:39 +0000

Facing a down economy and growing health concerns, the U.S. government continues to increase federal and state tax rates on cigarettes. But are smokers addicted enough to forgo the higher price tags?

Cigarette consumption in the U.S. is on a decline.

The U.S. generates over $32 billion in cigarette tax collections annually.

Since 2001 the average state cigarette tax rate has jumped from 43 cents per pack to 145 cents per pack.

China consumes more cigarettes than Japan, U.S. and Indonesia combined.

Greece consumes three times the amount of cigarettes than the U.S. in a given year.

How is Your Vice Taxed?

joshritchie — Thu, 26 May 2011 17:10:57 +0000

Sales taxes are one thing, but taxes on popular vices are another. What do some of the most popular vices cost consumers in taxes? What are some vices that you have and would like to see visualized? For example, would you be interested in sleep, coffee, reading, running…or taxes related to hobbies? Here we take a look at three Sin Taxes that generate billions of dollars from taxes every year and the rates consumers are paying. How does your state compare?

http://intuitturbotax.files.wordpress.com/2011/05/rental-property.swf

Interactive by Column Five Media.

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How Much Does the Government Make Off of Gambling?

joshritchie — Thu, 09 Sep 2010 16:20:12 +0000

In the fourth installment of our “Sin Tax” series, we explore the financial implications of gambling on Uncle Sam’s bottom line. It’s no secret that the government makes some income from gambling. But, many would be surprised to find that total gaming brings in nearly $100 billion in tax revenue each year. From legal bookmaking to card rooms, the graphic below illustrates where the money comes from. We also take a look at the various tax rates across the U.S., by state and by type of establishment.

How Much is the Government Making Off of Tobacco?

joshritchie — Tue, 22 Jun 2010 16:59:19 +0000

It’s no secret that the government taxes our spending– in fact, sales tax is one of the main ways that the government brings in money. But there are a number of other items that have their own additional taxes imposed, whether at the state or federal level. And, when it comes to cigarettes, the consumer pays both. Would it be right to call this a tax on one’s vice, or sin? While we don’t claim to be any moral authority, the figures and statistics are quite interesting.

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