10 Surprising Ways Your State May Tax You Next
Remember the line from The Beatles' "Taxman"?
Remember the line from The Beatles' "Taxman"? -- "If you try to walk, I'll tax your feet"? There may be some truth in it--literally. Facing large budget shortfalls and unwilling to raise general taxes in a slow economy, states are looking for creative ways to raise a little extra revenue here and there, including taxing shoe repair. Here are some of the proposed new taxes and user fees under review by state governments across the country. Some plans will be met with public scorn; others will be adopted with little notice. The slideshow begins to your right.
Plumbing & Electrical Services
One plan in Pennsylvania, supported by Governor Ed Rendell and many in the legislature, would add a 6% sales tax to both services. Industry groups representing plumbers and electricians are ratcheting up the opposition. A compromise may be to make the service tax temporary until the state budget picture improves. Guess who would pay?
Watch Repair & Tailoring
Owners of fancy wristwatches in New York are sure to get wound up over an Empire State legislative proposal to tax watch-repair services at the 4% sales tax rate. A related proposal would tax tailoring services for clothes at the same rate.
Will the Keystone State tax the soles of its residents? Professional cobblers have attracted the attention of legislative taxwriters. The legislature is looking at extending Pennsylvania's 6% sales tax to shoe repair services. Critics of the plan say the state is targeting shoe repairers in part because they don't have the political heft to fight the plan in the state capital of Harrisburg.
Later this year, Alabama will debate taxing gym memberships, a plan that could raise several million dollars a year in state revenue. A monthly membership would include the Yellowhammer State's 4% sales tax. Look for gym users to get plenty exercised over the plan. The District of Columbia proposed a gym fee earlier in 2010 but it was shouted down by vocal opponents, including yoga practitioners.
Big Lebowski, take note. Twenty-six states already apply some type of sales tax or selected fee on the use of bowling alleys. Several more, including Michigan, Nevada, North Carolina and New Mexico, are considering doing the same. The extra fee is not a large revenue raiser for states -- most estimates are in the $2 million range. (There are only so many bowling alleys and only so many big spenders on bowling.) Still, it's a small step many states are taking to help fix their budgets. The Dude may abide. But The Dude will surely abhor this.
If you're on the links in Kentucky, the 19th hole may be the one in your pocket. One of several revenue enhancement plans lawmakers in the Bluegrass State are considering is slapping a 6% state sales tax on golf course greens fees. A decision is expected by the end of the year.
Faced with a $2 billion gap in the state budget, lawmakers in Arizona, the Grand Canyon State, will soon consider adding a 5.6% sales tax to basic charges for boarding riding horses on horse farms. The legislature may impose another tax on hiring professional horse trainers. Similar horse-boarding taxes are already in place in South Dakota, Nebraska and New Jersey.
Having a professionally cleaned backyard pool in Indiana may soon come at an extra cost. Hoosier lawmakers may place the state's 6% sales tax on the service, possibly raising a couple of million dollars a year to help balance its budget. It's not an entirely novel idea. Connecticut, Kansas, Minnesota and South Carolina have skimmed taxes from residential and community pool cleaning services for years.
Is it too early to measure drapes for your new office? Oregon, Colorado and New Jersey are mulling various proposals to add 2% to 6% fees on professional interior decorating services. Such fees could add to the cost of new commercial buildings and major home refurbishing. Interior decorators won't take this sitting down.
Van and Truck Rentals
Need to rent a large truck to move office equipment or for a big project for your business in Louisiana? The Bayou State is considering taxing such rentals at 4% of the total charge. A competing draft proposal would establish a flat user fee for rentals. In any event, business owners would have to pay more where they hadn't before.