Running Head: THE BOTAX
Andrew K. Keahiolalo
Embry-Riddle Aeronautical University
There is a new tax being proposed in some states, ironically not California, to tax plastic surgery and related procedures. Through out the course of this document, we will discuss the effects of the tax. Including the relationship between the industry and demand and price, and who will actually pay the tax in the end. The view of this paper is through the eyes of a brand new economist (my self); which is to say that is lacking any profound breakthroughs in economics. It is, however, the issue as I ...view middle of the document...
New Jersey is the pioneer on this front and is estimating an extra twenty-five million bones a year from this tax alone (Journal Times, 2005).
Let’s look at what is really going to happen. In an internet chat interview with Alison (last name excluded), a cosmetic surgery consultant (CSC) for Marina Plastic Surgery Associates who runs Los Angeles Tummy Tuck, I pretended to be a middle aged house wife in need of a tummy tuck (I know, I’m a sick bastard). She gave me a range from four thousand to seven thousand dollars depending on a face to face interview where the doctor would evaluate my “needs”. She then proceeded to ask me questions like do I have any kids and resulting stretch marks, do I like the shape of my chin, any visible scars I would like to get rid of. These people are good. I was the only one in the equation who knew the truth about my anatomy and when the interview was over, I was the one who ran to the mirror to check the “crows’ feet” forming in corners of my eyes, and take notice of the rogue hairs growing on the back of my arms. That being said lets give us the best case scenario. I (the house wife) walk in to the clinic and the doc says, “Your almost perfect, only four thousand dollars please”. And by the grace of the Almighty, I am able to resist the CSC con artists as they prey on every apprehension I can conjure about myself. Quick math gives us a grand total of two hundred and forty dollars going to the state. To me, it doesn’t seem like that much, especially to those who can shell out four grand for something like this.
Hold on just a second. What is really, really going to happen? What I mean is who is going to pay this tax, the doctors or the patients? This is dependent on, among other things, the price elasticity of demand in the “make me fake” department. Its no secret that the more elastic the price, the more the seller pays in tax. So let’s look at what makes price elastic and relate it to our situation.
The rule: the more substitutes, the more elastic the product. Substitutes to plastic surgery are few. One of them includes diet and exercise, neither of which are very popular with this particular demographic. There is an injection being developed in the United Kingdom that is supposed to melt the fat in someone’s love handles and other pudgy areas. That technology is not available in the United States, yet. There are, however, many places to have plastic surgery performed. In Arizona alone there are over two hundred certified plastic surgeons. So, as there are many options to have plastic surgery, there are few substitutes for it. The fact that the tax in question is industry wide, at least on a state level, means it doesn’t matter where you go, the tax will be there. This does bring up another point, what about other states where there is no vanity tax? California, the home of the Govinator, has no such tax. So I guess if your time and a quick flight to Los Angeles is worth less than two...