GOP targets healthcare tanning tax

House Republicans have targeted for repeal a tax on tanning-bed services meant to offset costs of the new healthcare law. 

Rep. Michael Grimm (N.Y.) and 23 other Republicans have co-sponsored legislation to repeal the 10 percent tax included in last year’s healthcare overhaul. 

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While a tax on tanning beds might seem like a minor issue, Grimm argues it is a serious matter, as the tax hurts small businesses and the economy. 

“American small-business owners, the drivers of our economy, don’t think it’s a laughing matter,” Grimm said in a statement. “This unfair punishment of small businesses must be repealed.”

Other sponsors of the legislation include Reps. Patrick Tiberi (R-Ohio) and Phil Roe (R-Tenn.). 

The legislation has the support of the Indoor Tanning Association (ITA) as well as the National Taxpayers Union (NTU) and American for Tax Reform. 

“This tax has been a serious hardship on our industry,” said Dan Humiston, president of the tanning association. 

He estimated it could hit as many as 18,000 tanning businesses across the country, and said 3,100 businesses have closed since the tax was put into place last July. Humiston said that led to 24,000 job losses. 

Humiston also said many member-companies are being audited because of the new tax, which has created another hardship. 

“In reality, this tax takes money out of the pockets of some of those least able to afford it — working women, who are not only customers but also make up a majority of our business owners, and college students, who are both customers and employees,” Humiston said.

The tax was included in the healthcare overhaul in part because of concerns that indoor tanning can lead to a higher risk of skin cancer. The industry argues ill health effects from their services are exaggerated. 

Grimm and the other lawmakers don’t provide an offset for the estimated $2.7 billion that the tax would raise, though a spokesman for the congressman said to expect an offset to be offered in committee. 

Congress already has repealed one part of the healthcare law that required businesses to report all purchases of $600 or more to the IRS. That requirement was also included as a revenue-raiser for the healthcare law, and the $21 billion cost of repeal was offset. 

Opponents of the tax say it couldn’t possibly raise the $2.7 billion over 10 years estimated by the Joint Committee on Taxation (JCT). The JCT has said it could not divulge the economic models it used to come up with the revenue estimate. 

The IRS exempted health clubs with tanning services from the tax, said John Overstreet, executive director at the ITA. This will “cut down what they’re going to collect,” he said. 

Overstreet said Grimm took an interest in the tax repeal and approached the ITA about introducing legislation. 

The NTU told The Hill that “any legislation that rolls back a tax increase, particularly one that is so targeted against a specific set of small-business owners, earns NTU’s support.”

Americans for Tax Reform said the tax is one of 20 new or higher taxes included in the healthcare law enacted last year that it’s targeting to repeal.

“It disproportionately hurts women- and minority-owned small businesses with very low profit margins,” said ATF’s Ryan Ellis, which backs the full repeal of the healthcare law. 

Other co-sponsors of the legislation include Reps. Todd Young (Ind.), Frank Guinta (N.H.), Steve Stivers (Ohio), Tim Walberg (Mich.), Thaddeus McCotter (Mich.), Marlin Stutzman (Ind.), Marsha Blackburn (Tenn.), Brett Guthrie (Ky.), Jason Chaffetz (Utah), Lynn Westmoreland (Ga.), Tim Huelskamp (Kan.), Richard Hanna (N.Y.), Kevin Yoder (Kan.), Mike Pompeo (Kan.), Lynn Jenkins (Kan.), Bill Huizenga (Mich.), Lee Terry (Neb.), Sam Graves (Mo.), Rick Crawford (Ark.), Jeff Denham (Calif.) and Reid Ribble (Wis.).