Americans who choose to spend money on cosmetic surgery and procedures have been considered to be taxed for their indulgences. In an effort to fund treatment for those who cannot afford basic healthcare, some members of the White House and Congressional groups have proposed a 10% excise tax on elective cosmetic surgery procedures. This has been called, somewhat humourously, the Botax.
The proposed cosmetic surgery tax is theoretically a progressive tax on the wealthy. But the reality is many people who undertake cosmetic procedures today are not wealthy but middle-class Americans. Financing on cosmetic surgery is at an all-time high, suggesting that the boom in cosmetic surgery in recent years is not coming from the wealthy. In addition, such a tax would disproportionately be levied on women. Women make up over 90% of cosmetic surgery patients, according to statistics gathered by the research arm of the American Society for Aesthetic Plastic Surgery. They looked at in-office injectable treatments which showed that the typical aesthetic patient is a married working mother between the ages of 41 to 55 with a household income of less than $100,000.
The broader picture is that injectable treatments do not make up the majority of money spent on cosmetic surgery, accounting or about 3 billion of the 10 billion or so spent on these elective endeavors per year.The amount of money spent on any surgery is obviously much higher ($3,000 to $15,000) versus any in-office based treatments. ($300 to $ 1,000) The proposed excise tax, however, appears to be intended to apply to all cosmetic surgery and treatments.
This is not the first time that cosmetic surgery taxes have been proposed. A number of states have considered taxing certain cosmetic surgery procedures, including face-lifts, tummy-tucks and Botox injections in the recent past. New Jersey passed the first cosmetic surgery tax law in 2004. Â (a bill to repeal the tax was vetoed in 2007) Since then, lawmakers in states including Texas, Illinois, Washington, Arkansas, Tennessee and New York have introduced bills or budget proposals to install similar taxes, although none of those states has passed the taxes into law. Proponents of these taxes say that since they are levied on elective procedures, they are painless ways to raise money for state programs.
The taxing of certain cosmetic medical procedures is based on the stated premise that they would only be on procedures that are directed at improving one’s appearance and not those procedures that promote the proper function of the body or prevent or treat illness or disease. Given the history of insurance companies defining this same distinction, one should be very concerned about what any such proposed taxes laws may mean in regards to one’s general health. Such tax propositions set a dangerous precedent for the government to consider subsequently taxing patients who need elective procedures such as lasik vision correction, bariatric weight loss, orthopedic joint surgery, and other similar medical procedures (which has been determined to be elective) based on a body of elected officials, rather than a physician’s, interpretation of what constitutes medical necessity.
Such excise taxes are also conspicuously at odds with the global goal of spreading the tax burden as neutrally as possible over a broad tax base. This avoids a discriminatory tax to be borne by a few selected individuals. Excise taxes on cosmetic procedures do exactly that creating a discriminatory tax burden that will drive the patient to seek other methods to service that need or avoid that need altogether. As New Jersey has found out, the projected revenue collections was nearly 75% less than projected the first year after it was enacted.
Selective excised taxes are not new and the arguments against them have always been that they are discriminatory and are not effective in the long-term. Much of any revenue gained is largely offset up by administrative and collections costs, particularly when the overall number of taxed items is relatively small. While for now, a cosmetic surgery tax has apparently been tabled, I would not be surprised to see it resurface as we head into the health care reform debate this fall.
Dr. Barry Eppley
Indianapolis, Indiana