The Washington Post's Sarah Kliff was one of just a dozen or so people to attend a hearing on ObamaCare's new tax on indoor tanning salons. From her dispatch:
Regulation may be mind-numbingly boring, but it matters, a lot. Take the tanning regulation: The law imposes a tax on “any indoor tanning services equal to 10 percent of the amount paid.” But that actually raises a lot of questions: What about places that offer tanning without a specific fee, like a gym? As I learned at today’s hearing, gyms, salons, video stores, even laundromats now offer tanning services as a sort of bonus perk to draw in customers, often without charge.
The IRS had to address this question. In a preliminary regulation, it decided that places that include tanning, but without a specific price, are not subject to the new tax. That has indoor tanning salons furious; it was unfair, they argued, to tax one provider of tanning services but not the other.
“People in the industry are asking why a video store bundles five video rentals with a free tan, they don’t have to pay the tax,” Quinn [of tanning chain TanPro] said during his testimony, urging a change in the final regulation. “This just defies logic.”
In the grand scheme of things, the tanning tax regulation is a few pages in the hundreds of thousands that will ultimately be written for the Affordable Care Act. But if you’re a tanning salon, it matters a lot — much more than any of the politics surrounding Romneycare or news conferences on repealing the law.
There are a couple of points you can draw from this. One is how arbitrary this sort of tax, which is really designed to serve a regulatory function (discouraging indoor tanning), usually is. Why does the tax apply only to tanning salons and not to gyms that also have tanning beds? Because that's how IRS officials decided to interpret a law that was probably written by people who weren't thinking much about the distinction at all. Now that tax will end up driving industry-specific lobbying, with tanning salons fighting gyms and video stores over whether or not to rewrite the law. In the meantime, it will probably reshape the indoor tanning market by giving an advantage to businesses that offer tanning as a bundled service.
A related point is that legislators often seem to be under the impression that they can force whatever outcomes they want just by telling someone to draw up legislation saying it must be so—and then, more often than not, bragging that they've accomplished whatever it is they wanted to do. But they tend to ignore the question of how, exactly, those regulations will be implemented and enforced. That's how you end up with, say, rules ordering health insurers not to turn down children with preexisting conditions that result in insurers taking child-only health insurance policies off the market entirely. The details, however uninteresting, are what matter. Regulation isn't an outcome; it's a process.