By Ken and Daria Dolan
If you needed any more proof that our state, local and federal budget spending is out of control, here it is. In an effort to get out from under record deficits and support their spending habits, politicians from Seattle to New York and everywhere in between have cooked up some outrageous taxes.
Some of these taxes are already on the books, some are just up for debate, but all show you just how far politicians will go to put a little more of your money in their pockets.
Let's start with so-called "sin taxes," which have always been popular with politicians. Taxing items seen as vices--such as smoking, drinking and gambling -- is seen as an easy way to raise tax revenue. But the definition of "sin" seems to be expanding...
Here's proof that some politicians are a few cards short of a full deck. Anyone who purchases a deck of cards in the state of Alabama must pay a "card tax" of 10 cents. However, the law claims that the tax must be levied on the purchase of any deck containing "no more than 54 cards" so if you are lucky enough to find a deck with 55 cards, you're home free! Really, how much money can this possibly raise?!
In Utah, any businesses where "nude or partially nude individuals perform any service" have to pay a 10% sales and use tax. This tax is applied to all revenue from admission fees as well as merchandise, food, drink and "services" sales.
As part of the controversial Patient Protections and Affordable Care Act of 2010 (better known as healthcare reform), there is now a 10% excise tax on using a tanning salon. This tax is expected to raise a surprising $2.7 billion dollars over 10 years.
Be careful what you eat in Kentucky or it can cost you. There is now a sales tax on any food classified as candy. But the definition of candy is controverisal -- under Kentucky's definition, a Reese's Peanut Butter Cup is candy, but a Milky Way is not. Huh?
The tax is also snaring some seemingly healthy foods. If a breakfast bar contains natural or artificial sweeteners along with fruits, nuts or other healthy ingredients, but has no flour and doesn't need refrigeration, it's considered candy and is subject to sales tax. But breakfast cereals with exactly the same ingredients are not considered candy and are not taxed.
After 20 years of living, working and raising a family in New York City, nothing surprises us. But the city certainly has cooked up some outrageous new taxes. We doubt any of these will do much to help them dig out of their massive budget deficit, but let's take a look...
In January, the New York City Fire Department proposed a new "crash tax." The proposal, which stirred up a very heated debate, calls for a $500 fine for anyone in an accident requiring emergency response vehicles at the scene.
Haunted House Tax
Here's a new tax that would scare any reasonable person. If a haunted house includes music and the admission charge is more than 10 cents, then sales tax applies. Yet New York, the home of one of the greatest theater arts communities in the world, doesn't tax musical comedies, operas or chamber music shows. Go figure.
New York is cracking down on enforcing the tax on prepared food. One of their targets: the beloved bagel. If you buy a whole bagel and take it home with you, it's tax free. But, if you purchase a bagel to eat at the bagel shop, you'll have to pay sales tax.
A New Kind of Death Tax
As of January 1, 2011 it costs money to die in Seattle. King County, which includes Seattle, has instituted a $50 fee for reporting a death to the Medical Examiner's Office. If you don't pay, you don't get the permission and paperwork needed in order to be buried.
There is now an annual tax on brand name pharmaceutical companies. This is a tax on corporations, not individual taxpayers, that's expected to generate $2.5 billion in 2011. But you better believe the cost of this new tax will be passed on to consumers in the form of higher prices for the brand name drugs we buy.
New FSA Tax
If you use a Flexible Spending Account (FSA) that lets you pay for medical expenses with pre-tax money, brace yourself for new restrictions. New Flexible Spending Account (FSA) rules will limit the amount you can set aside tax-free to just $2,500 starting in 2013. That amounts to a tax increase on anyone who currently uses an FSA to pay for healthcare costs over that $2,500 cap.
With budget deficits reaching a crisis point, we think you'll see plenty of new and outrageous taxes coming your way. We should all pay our fair share, but make sure you're not paying one penny more! Take every tax deduction you're entitled to and make those tax deductions airtight!