If you live in Washington, D.C. and you belong to a health club, you soon may lose more money than pounds after a good workout. Today, the District of Columbia City Council will consider a proposal to tax health club, gym, and yoga studio memberships, along with a host of other services and products that have not been taxed before. Let's call the gym tax the "Sweat Tax." Some may wonder why D.C. would tax your time on the elliptical or steam in the sauna. The reason is D.C. is looking for ways to deal with a $550 million deficit, a result of years of overspending.
But rather than looking for savings, some on the Council would rather take the easy way out and hike taxes. In addition to the Sweat Tax, some on the Council want to hike the income tax on high-income residents from 8.5 to 8.9 percent. The problem with this is that an income tax increase would give tax-paying residents incentive to leave the District for lower tax jurisdictions in Maryland and Virginia, taking their tax dollars with them.
There are also proposals to impose taxes on things like soda, liquor, and theater tickets. Some of the more creative proposed targets include massages, taxidermy services, antique collecting advice, and dating services. But as the taxes on these goods and services increase, the costs will rise, and people will buy less, which means less revenue and more job losses.
Rather than finding creative ways to increase taxes, the City Council should get creative about finding savings in the city's budget.