Tuesday, January 17, 2012

Another Government Intervention Fails to Accomplish Goal

In 2005 the State of New Jersey adopted a so-called Botox Tax of 6% on cosmetic surgery. The rationale being, as NPR reports:
"This is an income situation where people are able to afford elective surgery, they're not medical necessities," [New Jersey Assemblyman Joseph] Cryan said. "Clearly, reconstructive surgery would not be part of it. So it's optional surgery designed to enhance one's appearance, as opposed to the necessity or quality of one's life."
Here's the first point where New Jersey state politicians were wrong: cosmetic surgery is not a merely function of plain vanity, it is a result of low self-esteem. People that choose elective surgery do it believing that the procedure would present them with an improved outlook on life. Low self-esteem drives people to all sorts of self-destructive behavior, such as alcoholism and heavy drug use; while others just lack the courage to reach for their full potential. Oversimplifying such a complex psychological state to a point of vanity is plain dangerous.

The other point that the New Jersey Assembly missed is that in a society where people are free to move about, they have the option of "voting with their feet." If an average breast enhancement procedure costs $7,000, then the 6% tax amounts to an additional cost of $420 for the customer. That constitutes enough of an incentive for them to opt for a road trip across the state line where instead of wasting the $420 on a tax - for which get get nothing in return - they can spend it on food, lodging and some sightseeing. And they have. Even Snooki can figure out that 400 bucks spent on pampering herself is better than setting it on fire. Despite the popularity of such shows promoting plastic surgery, like Jersey shore and The Real Housewives of New Jersey, the state of  New Jersey today is host to fewer such procedures, as a result of this government intervention. Thus not only have practitioners lost income, the Botox Tax has not brought in the expected tax revenue either.

The Botox Tax is about to expire today, unless Governor Chris Christie signs an extension. Despite the failure of the policy, there is still a voice arguing for the tax to remain in place:

New Jersey's tax on cosmetic surgery is only bringing in about $10 million a year, less than half of what was projected. Those revenues, however modest, go into a special fund that reimburses hospitals for charity care — a fund in which state contributions are matched with federal dollars. Suzanne Ianni of the Hospital Alliance of New Jersey is worried about losing those contributions.
"This is actually bringing in dollars to New Jersey that otherwise we wouldn't be able to get," (italics added) Ianni says. "Reversing these assessments that draw down federal monies, I feel, is going in the wrong direction."

Herein lies the crux of the issue. Mrs. Ianni is interested not in what is earned; she just wants to grab a chunk of change from the pockets of others. It's the socialist mentality on unabashed display. When pickpockets do this on the street, we call it robbery, when government does it: it's social justice.

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