Nickeled and Dimed: New Taxes Hit Your Favorite Indulgences

Reported by Hampton Pearson, written by Michelle Lodge

That tattoo you’ve been considering on your next trip to Minnesota may fall off the to-do list, if the state’s legislature is successful at passing a bill to tax that service and others.

The push by Minnesota legislators is part of a drive in various states to bring in much-needed revenue by taxing services that have largely gone untaxed. It's a growing effort to rescue governments from their overspending ways. Other proposals in the works are a tax on soda in New York and bottled water in Virginia.

Aesthetician performing a facial

Under the Minnesota plan, body piercing, manicure and facial services would also be taxed, all to raise funds for small towns outside of the Twin Cities. Pro-tax supporters contend that body art is a nonessential service.

However, championing such a bill poses virtually no risk for legislators: No politician is going to loss an election because he or she couldn’t deliver the “tattoo nation” voting block.

Naturally, the idea of more taxes is unpopular in some circles. And it can be downright risky for a state if it is implemented poorly.

Quirky Tax Creep

"Politicians are hoping taxpayers won’t notice they’re being nickeled and dimed to death,” said Peter Sepp of the National Taxpayers Union. “Unfortunately, they often don’t, but when you add it all up, it’s amounting to thousands of extra dollars a year that a typical family may have to pay.”

“You can’t let people raise taxes too much, because if you do,” said CNBC contributor Gov. Howard Dean, “you drive jobs out of the state. You can’t cut the daylights out of services and leave people destitute. It’s a very tough balancing act.”

As for other “nonessential” services, in the new health care reform bill, there’s a 10 percent tax on indoor tanning sessions.

And unlike the other states that are adding legislation, Texas is fighting to hold on to a sure sign of revenue—taxing patrons of strip clubs at $5 each. The state is currently in court to maintain the status quo. And why not? Through the tax, Texas has raised $13 million in just three years.