Botax?

Today in the news I saw a story on possibly placing a 5% tax on cosmetic surgery. A few things come to mind when I heard this. First, why would Congress want to place a tax on a service that does so much good for society? Cosmetic surgery, is a positive thing that can not only increase self-confidence and appearance, but can produce benefits to the people affiliated with the patient. For example, if Susan feels uncomfortable about her crooked nose and decides to get a nose job not only does Susan benefit but her friends benefit in a small way by not having to glance at crooked nose. The same thing can be said for Susan’s spouse who although doesn’t mind the appearance of her nose believes Susan looks much better after her surgery. In addition to looking better, Susan’s husband notices she has more self confidence and is not as self conscious about her body like she use to be. Clearly, not only does Susan benefit but possibly her friends, significant other, and family might reap small benefits as well. In economics, this is known as a positive externality. In 2008, 12.1 million cosmetic procedures were performed (American Society of Plastic Surgeons). As I mentioned before not only are the people getting surgery benefitting spouses, boyfriends, girlfriends, and family members are benefitting from these procedures.

Taxing any good or service will always result in getting less of that good of service. Often government policies try to curb bad behavior. This is the reason taxes on products such as alcohol and cigarettes are so high. However, in this case there is no reason to tax cosmetic surgery.

In addition to this people always have to be aware of the law of unintended consequences. So let’s suppose Congress institutes a 5% tax on “cosmetic procedures”. Couldn’t doctors simply change the name from “cosmetic procedures” to “luxury procedures”? Wouldn’t a price increase lead consumers to seek out cheaper alternatives (doctors that were not board certified)? Since there would be a price increase couldn’t it lead surgeons to not perform as many surgeries which could lead to long lag times between surgeries which could potentially hurt their quality since I would imagine surgeons are at their best when they perform surgeries without a lot of lag time? By lag time I mean going weeks without performing an operation not a few hours. I think some of these questions need to be considered before anyone votes on this.