Is There a 10 Percent Cosmetic Surgery Tax Coming?

July 27, 2009

Drudge is quoting a CONGRESS DAILY report, which says that lawmakers are interested in raising revenue for health care reform via a “10% excise tax on cosmetic surgery deemed unnecessary for medical purposes.”

Good tax policy would argue that such an excise tax would only be imposed if there was truly a negative harm that cosmetic surgery imposes on others in society (i.e. negative externality), not merely a way to raise revenue.

Which begs the question…is there a negative externality from cosmetic surgeries?

Actually, at first thought, if an attractive appearance provides benefits to others in society that cannot be excluded (i.e. a public good), then maybe there should be a subsidy for cosmetic surgery as opposed to a tax. On the other wrinkle-free hand, if cosmetic surgery is buying a signal that too many people end up buying from social welfare perspective (e.g. like Spence argues with higher education), then maybe a tax would be justified.

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