Skip to content

Stealth Taxes

1 min readBy: Joseph Bishop-Henchman

Ever since Walter Mondale was pilloried in 1984, it's been the rare politician who makes a stand for higher taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. es. Even President Obama sold his program during the campaign as lowering taxes for all but high-earners.

We at the Tax Foundation work a lot on tax definition issues, and I often argue that it's important for two reasons. One, many states have stricter legal requirements for tax laws (multiple readings, public votes, etc.), so a firm definition is important. Two, Americans are more skeptical of things labeled "tax" than other revenue proposals, a skepticism that dates before the Founding of the Republic.

Maybe not just Americans. An excellent New York Times piece lists some stealthy taxes being proposed both here and abroad:

  • France has introduced taxes on crustaceans and mollusks to pay for diesel fuel subsidies for fishermen.
  • A higher airline tax in Britain will go to the general fund, despite rhetoric that it would further environmental efforts. Also there's a "horse tax" proposal that I don't fully understand.
  • Northern Ireland increased the cost of dog licenses ten-fold.
  • The article notes that average VAT (sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. ) rate in the European Union rose to 19.8% in 2009, up from 19.5% in 2008.

Full article here.

Have you come across examples of stealth taxes? Send them to me at henchman [at]