There are five basic legal forms of business structures found in the United States: C corporations, S corporations, sole proprietorships, partnerships, and Limited Liability Companies (LLCs). In order to understand...
- The Tax Policy Blog
- How About a Tax on Sex?
How About a Tax on Sex?
We've all heard that cigarettes are bad for us and for society as a whole and should therefore be taxed. Many people also believe that certain sexual behavior is bad for individuals and society, so why not tax it as well? Stephen Dubner, co-author of Freakonomics, provides us with a satirical "Immodest Proposal" for taxing sexual activity. My favorite part of the proposal was this, because it would be all too true if such a sex tax were actually imposed:
Let it be clear that the aim of said tax is not to deter sexual activity itself, but rather to capture some of the costs imposed by certain extraneous sexual activity that, especially once made public, tends to divert precious resources from more worthy subjects; to this end:
- Married couples will receive a substantial credit for sanctioned, in-home sexual activity; and, conversely:
- The highest rates shall be paid for premarital, extramarital, and otherwise unusual or undesirable sexual activity; and:
- Sexual activity between members of the same gender; or activity between more than two participants; or in an airplane, on a beach, or in other "nontraditional" settings shall surely be taxed at a higher, though heretofore undetermined, rate. Also to be determined is a scale for noncoital activity.
What would optimal tax theory say? Beyond the Pigouvian reasons Dubner cites, actually, optimal tax theory would argue that sex should be taxed just like any other consumptive good under a world of perfect information. The problem stems from the fact that it cannot be easily measured and administered.
Ask yourself this: if prostitution were legal, shouldn't it be subject to a consumption tax? The answer is obviously yes. But while this may sound geeky, what about those who don't pay for sex? Isn't there imputed income being earned there, just as the Bureau of Economic Analysis treats owner-occupied housing? Both services increase utility.
Subscribe to the Tax Foundation Newsletter
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.