[Congressional Record Volume 157, Number 91 (Thursday, June 23, 2011)]
[Senate]
[Pages S4102-S4103]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. SNOWE (for herself, Mr. Roberts, Mr. Cornyn, Mr. Boozman, 
        Mr. Blunt, and Mr. Barrasso):
  S. 1278. A bill to amend the Internal Revenue Code of 1986 to repeal 
the excise tax on indoor tanning services; to the Committee on Finance.
  Ms. SNOWE. Mr. President, as former Chair and now Ranking Member of 
the Senate Small Business Committee, it is my privilege and my 
responsibility today to stand up for small businesses across America 
that are being unfairly hurt by a punitive and unnecessary tax. The so-
called ``tanning tax'' was included at the eleventh hour as part of 
last year's health care legislative maneuvering, and I am pleased to 
offer this legislation to repeal the tanning tax.
  The tanning tax was added to the health care bill without any 
analysis of how it would affect this industry comprised primarily of 
small businesses, 75 percent of whose employees and customers are 
women. I cannot reiterate enough that small businesses are the primary 
job creators in this country, responsible for more than two-thirds of 
all new jobs created. At a time when a staggering and seemingly 
intractable unemployment rate of over 9 percent has become the norm, 
when some 22 million Americans are unemployed or underemployed, when we 
are experiencing the longest period of long-term unemployment in 
American history since data collection started in 1948, surpassing even 
the 1982 double-dip recession for the length of unemployment, when the 
percentage of population that is employed has declined to 58.4 percent, 
the lowest level in nearly 30 years, how could anyone think that 
shuttering or slowing the growth of small businesses is a good idea?
  Reports show that small businesses lost an estimated $2 trillion in 
profits and asset valuation since the recession started in December 
2007, while larger companies have been less affected and are recovering 
more quickly. Combined with the current, on-going economic malaise, the 
tanning tax is certain to accelerate job losses in this industry beyond 
the 20,000 jobs already lost nationwide. These small businesses need 
our help, not a further hindrance such as this tax.
  I have heard first-hand of just what a job-killing, growth-preventing 
measure this tax is. Sun Tan City, a chain of small business tanning 
salons based in Augusta, ME, with 125 employees in Maine and another 50 
in New Hampshire have slowed dramatically the expansion of their 
business. They opened 7 new salons in 2009 but only 4 in 2010 and 
another 2 in 2011. Sun Tan City remitted $85,000 to the IRS just this 
past quarter, money that would have gone to grow jobs and their 
business.
  The tanning tax is not just about the money, it is also about the 
burden of compliance. Each store must collect and remit its tanning tax 
liability individually, increasing the paperwork and compliance burden. 
At an estimated cost of $74 per hour spent complying with paperwork 
burdens, merely remitting the tax imposes yet another enormous burden 
on small businesses.
  Moreover, the tanning tax is imposed in addition to any state tax 
levies. For instance, New Jersey imposes a 7 percent tax on tanning 
services, meaning tanning salons in New Jersey are now responsible for 
17 percent in taxes just for this service. We are already hearing that 
those seeking tanning services are going to other States when possible 
in order to avoid the higher New Jersey and Federal combined taxes. I 
guess that is one way to improve interstate commerce.
  The worst part of the provision, though, may be the way the IRS has 
interpreted its implementation, in a way that favors larger businesses 
over smaller ones. The IRS released its tanning tax-implementing 
guidance on June 15, 2010, just two weeks before the tax became 
effective. This guidance contained a gross inequity that will subject 
some businesses to the tanning tax while exempting others. The guidance 
exempts ``qualified physical fitness facilities,'' which include gyms. 
That is, a person could pay for a membership at such a facility and be 
able to use that facility's tanning beds without having to pay the tax. 
Thus, the tax is having a disproportionate effect on small businesses 
while allowing larger, syndicated gyms and similar facilities to go 
untaxed.
  There are legitimate concerns about the health of those who engage in 
tanning, whether using natural sunlight or tanning beds. I do not come 
before you today to argue the science. But the Food and Drug 
Administration has been under pressure for years to ban outright the 
use of tanning beds and repeatedly has declined to do so. The 10 
percent tanning tax was never designed as a deterrent; it was designed 
solely to replace the 5 percent tax on Botox injections and elective 
cosmetic surgery as a revenue raiser to pay for the health care bill. 
No other factor was discussed, nor were there ever hearings on the 
merits. I am as concerned as any Senator or citizen about the health of 
our fellow Americans, but a dead-of-night job-killing tax increase on 
small businesses is not the way to address any health concerns!
  There are other ways, such as an education campaign, that would be 
far

[[Page S4103]]

more effective and less cumbersome than this 10 percent tax to inform 
people about any tanning risks, especially when the IRS has carved out 
big businesses from being affected by the tax. Why is it safe to tan in 
gyms but not in salons? That is not a question the IRS should be 
answering. If the health issue is important enough to merit scrutiny of 
the industry, then let us have that debate, but the fact that there was 
no debate before this onerous tax was imposed makes it doubly 
outrageous.
  This bill is supported by the National Federation of Independent 
Businesses and by the Indoor Tanning Association, which is comprised of 
business owners and operators, as well as manufacturers and 
distributors of tanning equipment. The tanning tax was a painful hit to 
this sector of our economy and this bill will seek in some way to 
rectify what was done to them by eliminating the onerous tax going 
forward.
  Finally, I want to thank Glen and Dennis Guerrette, whose father, 
Will, served in the Maine state legislature, and Lewis Henry, all from 
Maine, for bringing this issue and their stories to my attention. I 
would also like to thank Congressmen Michael Grimm and Pat Tiberi and 
many others for their leadership in the House on this crucial issue.
  In conclusion, I urge my colleagues on both sides of the aisle to 
support our bill.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1278

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. REPEAL OF EXCISE TAX ON INDOOR TANNING SERVICES.

       (a) In General.--Subtitle D of the Internal Revenue Code of 
     1986 is amended by striking chapter 49 and by striking the 
     item relating to such chapter in the table of chapters of 
     such subtitle.
       (b) Effective Date.--The amendments made by this section 
     shall apply to services performed after the date of the 
     enactment of this Act.

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