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Weird Taxes Affecting You Right Now

Written by Eva Rosenberg on September 29, 2010 in Tax  |   6 comments

Weird Taxes Affecting You Right Now As you probably learned in middle school history class, the formation of the United States of America was precipitated by just one tax too many from the British—the Stamp Act led to an infamous Tea Party and, ultimately, a…

Taxes of additional typesWeird Taxes Affecting You Right Now

As you probably learned in middle school history class, the formation of the United States of America was precipitated by just one tax too many from the British—the Stamp Act led to an infamous Tea Party and, ultimately, a revolting situation.

Watch out! We may be on the verge of a new revolt. Take a look at some of these new taxes that might affect your bottom line:

Tanning Tax: Hot Stuff!

The cause? The new tanning tax! Courtesy of the Affordable Care Act, if you want to get a little artificial sun, you will now pay a 10 percent tax on indoor tanning services. How un-American is that? That’s really going to impact George Hamilton’s budget. What about yours?

Bottled Water Tax is All Wet!

See if you can figure out this new water tax in Washington State. Folks who get a prescription for their water can buy their bottled water tax-free. But if they get a disposable bottle with their bottled water, they have to pay the tax and apply for a refund when their taxes reach $25. Do you think there’s an iPhone app to scan those bottled water receipts?

Taxes Bar None

Starting this summer in Kentucky, retailers get a not-so-sweet deal trying to identify what is and isn’t candy. Breakfast bars containing natural or artificial sweeteners along with fruits, nuts, or other ingredients; without flour; and that don’t need refrigeration are classified as candy and are subject to sales tax. But breakfast cereals with exactly the same ingredients on the label are not classified as candy—and are not subject to sales and use taxes. Huh? Would this change your shopping habits?

Now You See It, Now You Don’t Tax

Wyoming did something smart, effective July 1 of this year. They stopped taxing sales of digital products with only fleeting use. For instance, you no longer have to pay sales taxes on downloadable pay-per-view films, since you don’t get to keep the file permanently. Of course, if you download ebooks that you get to keep forever, the sales tax is still there.

The Jock Tax

No, no, not that kind of jock. This started out in 1991 as a tax on Michael Jordan’s earnings on a game the Chicago Bulls played in California. It was extended to tax anyone performing in, playing in, or working in California, even for brief periods. Since this tax worked in California, other states picked it up, too. These days, it’s not uncommon to see W-2s from half a dozen states for performers or support staff who’ve worked on one film project, or were members of a sports franchise traveling around the country.

In fact, this same issue is hitting the pro golfer circuit in Britain this summer.

Yup, if Tiger Woods goes to Britain to participate in the Ryder Cup matches in October, the Brits want to tax Tiger Woods on a percentage of his worldwide “passive income”—the millions of dollars he receives from sponsors for endorsements. This could cost him about a million dollars. In the past, Britain only targeted active income—income earned by the athlete for the specific event taking place in Britain. But winning a case against Andre Agassi several years ago has emboldened Her Majesty’s Revenue & Customs to go after the passive income of all foreign athletes who play in Britain.

The terrifying thing about this is if the Brits get away with it, how soon will it be before California—and other states—try it, too?

Eva Rosenberg, EA is the publisher of TaxMama.com, where your tax questions are answered. Eva is the author of several books and ebooks, including Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com.

Read More:

Phantom Income from a Short Sale or Foreclosure? TaxMama Gives You Two Ways to Avoid the Tax
New Tax Increase for Wealthy Americans: Will You Pay More?
Tax Tips for Commercial Real Estate Owners
Hiring? Do Your New Hires Qualify You for Tax Credits?

6 comments

  1. Brittany Mauriss says:

    Why are you comparing these taxes to the original Tea Party revolt? Have you given them even a moment of thought? The Water Bottle Tax is obviously designed to cut down on plastic waste, which sits in landfills and FLOATS on our oceans in the form of a landmass twice the size of the U.S….

    Google the Great Pacific Garbage Patch if you're still uninformed about this – http://www.independent.co.uk/environment/the-worlds-rubbish-dump-a-garbage-tip-that-stretches-from-hawaii-to-japan-778016.html

    And the Jock Tax? Am I really supposed to be up in arms because Tiger Woods is taxed $1 million? The man's net worth is over $600 million.

    "Watch out! We may be on the verge of a new revolt"? <– Given the fact that there's an actual Tea Party movement gaining traction in America, this kind of rhetoric is careless. I get that your post is supposed to be light and fluffy, but you should pause to think about how you may be alarming readers about taxes that are of little concern to them, have no bearing on their lives, and in some cases (e.g. Water Bottle and shopping bag taxes), are accomplishing what little progress can be pushed through Congress today to pick up the trash & waste across the country.

  2. Editor, Equifax Personal Finance Blog says:

    "The Sin and Luxury taxes will always be there. Scary how much tax there is on certain items like Liquor and Cigarettes..

    The other hidden taxes: take a look at what states/counties are charging for recording fees etc.. they have bumpped up a lot over the past few years.

    and in NJ, we now have a mansion tax. if you buy a home over 1,000,000 you pay an additional 1% tax for the honor of spending that much."

    Robert commented on this post via Active Rain: http://activerain.com/blogsview/1885915/weird-taxes-affecting-you-right-now

  3. Editor, Equifax Personal Finance Blog says:

    "California would tax the air we breathe if they could figure out how to monitor it."

    Virginia commented on this post via Active Rain: http://activerain.com/blogsview/1885915/weird-taxes-affecting-you-right-now

  4. Editor, Equifax Personal Finance Blog says:

    "I think we are one of the few states that have a County tax on top of everything else; we are also paying a higher sales tax to pay for our new Colts stadium…."

    Cindy In Indy commented on this post via Active Rain: http://activerain.com/blogsview/1885915/weird-taxes-affecting-you-right-now

  5. Eva Rosenberg, EA says:

    Dear Brittany

    Thanks so much for your passion.
    I love that!

    I am not objecting to the bottle tax.
    You're right – there is a lot of plastic junk out there needing to be recycled and used, instead of cluttering up landfills and waterways.

    My objection is to the weird way they've organized the law. Be consistent. Either tax all plastic bottles – or none.

    And you've TOTALLY missed the point on the jock tax. That tax is now affecting many people who, however briefly, work in other states. These days, I find myself having to do 5-10 state tax returns for some clients because they worked there for a couple of weeks – only to get their withheld taxes refunded. It's expensive for the client – and the only benefit the states get, is the short-term use of the money until we file for refunds. Sigh, I suppose that's something.

    But, Brittany, stay vigilant. We do need to simplify the system – for us all.

    Hugs
    Eva

  6. Pingback: Paying Taxes: How Is Your Vice Taxed? | Equifax Finance Blog


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