Bo-Tax back in play?

The Senate Finance Committee just decided that there would not be a public option in its health care reform plan.The Washington Post and New York Times have details on the vote.

No big surprise there. Sensing such opposition, Committee Chairman Max Baucus, D-Mont., never even included that option in his preliminary proposals.

Another item not in either of the chairman's marks, or working documents, was the long-rumored tax on cosmetic surgery procedures, or the Bo-Tax as legislative punsters tagged it.

But some say, according to the California Healthline newsletter, that 'Bo-Tax' as Funding Mechanism Still Under Consideration.

The Botox-plus tax didn't get very much support when it was floated months ago, but as lawmakers focus on the dollar signs, the proposal is looking better and better, reports Congress Daily. A recent analysis by the Joint Committee on Taxation found that a 10 percent excise tax on elective nips and tucks would generate about $10.9 billion over 10 years.

The tax wouldn't apply to "surgeries or procedures to ameliorate a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease."

I couldn't find the Bo-tax referenced in either Baucus' revised chairman's mark or the long list of amendments that the Finance Committee is still plowing through. But I wouldn't be surprised to see it reappear as the funding discussions continue.

Taxing Cadillac plans: Another funding mechanism that's beginning to look like it will stay in the Senate bill, and reportedly getting some positive reviews from House members, too, is the tax on insurers who offer expensive policies.

These so-called Cadillac plans would cost the insurance companies a hefty excise tax; 40 percent is the latest proposed rate. The problem is that the proposal, created to affect high-earners who could afford such policies, could also cost folks whose health care coverage is more of a Chevrolet Malibu than a Cadillac.

I discuss Cadillac vs. Chevy coverage and potential taxation in more detail in my other blog, Eye on the IRS, that I write for Bankrate.com. You did notice that big ol' eyeball logo (and blog link) staring out at you there in the right column, didn't you?

You also can read more about these high-dollar plans at Marketplace and Forbes.

He said, She said: Finally, in case you missed it, Senate Finance Committee debate touched on the sensitive issue of motherhood last week.

Seems Sen. Jon Kyl, R-Ariz., didn't want to pay for maternity care. But Sen. Debbie Stabenow, D-Mich., had a quick comeback to Kyl's complaint.

Stabenow's position prevailed.

Related posts:

• Cosmetic surgery tax talk
• Healthcare, Cadillacs and taxation options
• Senate health care, take two
• The case for taxing healthcare benefits

Comments

[Evan]

Eric,

First and foremost, I'll put it straight out there, I dislike large government, it makes no difference it is ran by O or W. I understand the need for police, fire, teachers, military etc., but do I think the the hundreds of agencies are necessary? Absolutely not (want a full naseauting list of those agencies: http://www.usa.gov/Agencies/Federal/All_Agencies/index.shtml)

"As far as cosmetic procedures being "essential" or not was pretty much determined by the medical and insurance industries."

By your very words, the gov't should be deciding what is essential not the medical or insurance industry. You mention food, but what about shelter? Hotel Stays are taxed; so is cap gains on homes (over the 250/500K exemption); Why isn't Rent tax deductible?

"The fact of the matter is that certain items have to be taxed in order to support government operations and keep the country running."

Agreed. But why not a 40% sin tax on beer like is done with cigs? Why not 10% tax on soda? Why not a 2% tax on every video game? Why are you alright with attack botox (never had it nor am I related to any surgeon)?

I'd rather see a clean up of those hundreds of agencies mentioned above. Audit them figure out the waste!

"The items that are deemed most essential are generally not taxed at all such as groceries (not prepackaged good but raw products that need to be prepared into a meal), and in many areas clothing items up to a certain price-point."

This is decided location to location - there is tax on some foods in NY that wouldn't have a tax in CT. That is why it is known as a local sales tax.

"Oh, and here's the kicker: people CHOOSE the government by voting on senators, governors, mayors, president so don't go blaming the government, blame the majority of voters who put this current regime in place."

I am not sure what your point is... I understand the workings of a republic. I am not BLAMING anyone when I responded to your comment on this great post; rather, I was simply stating that just because YOU or a couple of senators believe this item to be a non-essential item does not mean you should tax it for the purpose of increased spending. Simply put, Stop Wasteful spending.

Or maybe we should get another Czar - called the wasteful spending czar, of course that person would have to have some skelaton in their past where they were in fact guilty of wasteful spending. Sorry, had to take that last zing.

[Best]

I agree with this. The fact that such procedures (unless necessary to correct a defect) are not even covered by medical insurance is a telling sign of the necessity of these procedures versus medically necessary procedures.

The fact of the matter is that certain items have to be taxed in order to support government operations and keep the country running. Without taxes, where would governments get the funding for school systems and public servants such as police, firefighters, and paramedics? The items that are deemed most essential are generally not taxed at all such as groceries (not prepackaged good but raw products that need to be prepared into a meal), and in many areas clothing items up to a certain price-point. Oh, and here's the kicker: people CHOOSE the government by voting on senators, governors, mayors, president so don't go blaming the government, blame the majority of voters who put this current regime in place.

[Eric J. Nisall]

Actually, Evan, it would appear from the current state of the economy that business consultants as well as financial planners would have been of great benefit to some degree. If you look at it from the viewpoint that just by having the outside guidance, many situations could have been avoided, such as retail chains going bankrupt due to throwing good money after bad, or people losing their houses because they did not have the long-term planning ability to consider maintenance, taxes, etc that add to the cost of ownership.

As far as cosmetic procedures being "essential" or not was pretty much determined by the medical and insurance industries. The fact that such procedures (unless necessary to correct a defect) are not even covered by medical insurance is a telling sign of the necessity of these procedures versus medically necessary procedures.

The fact of the matter is that certain items have to be taxed in order to support government operations and keep the country running. Without taxes, where would governments get the funding for school systems and public servants such as police, firefighters, and paramedics? The items that are deemed most essential are generally not taxed at all such as groceries (not prepackaged good but raw products that need to be prepared into a meal), and in many areas clothing items up to a certain price-point. Oh, and here's the kicker: people CHOOSE the government by voting on senators, governors, mayors, president so don't go blaming the government, blame the majority of voters who put this current regime in place.

[Evan]

"figuring that if people are willing and able to spend their money on such a non-essential thing..."

Who are you to say what is essential or non-essential? Is beer essential? Nope. Are movies essential? Nope. Are Carnivals or fairs essential? Nope. Is Coffee Essential? Nope (well maybe). Is soda essential? Nope. Are Business Consultants Necessary? That is what your main job seems to be. I would argue no, and the people hiring you probably have the money.

Just because YOU (or the current gov't) thinks something is non-essential doesn't mean you should tax the hell out of it.

[Eric J. Nisall]

I'm honestly surprised that elective "cosmetic" procedures haven't been taxed already, figuring that if people are willing and able to spend their money on such a non-essential thing, that maybe it can be taxed to help alleviate the tax burdens elsewhere (say, on lower-income individuals/families) or even as a buffer to offset some of the proposed budget cuts or just to supplement the current taxes collected by the government(s). Then again, I'm sure the reason it hasn't been passed is because all of the public officials use it themselves to look good for their constituents! I wonder how many people are already trying to use such a procedure as a deduction on their returns, not as a medical expense on schedule A, but on form 2106 or schedule C reasoning that it is "ordinary and necessary" for their line of work?