So the DC ‘yoga tax’ took effect on Wednesday

We’ve highlighted the debate about whether yoga studios in the U.S. Capitol ought to fall under a new sales tax, but at this point the debate is over. The tax took effect on Oct. 1.

I kid, of course. Like the debate will be over. Stay tuned.

But, for now, yoga studios still fall under the new tax, at 5.75%, because they count as “health clubs.”

The key argument point for those opposing the tax on yoga studios is that yoga isn’t about exercise. Even the BBC picked up that theme. Here’s the argument as presented to the Capitol Hill paper Roll Call:

Members of the yoga community made their case to representatives from the Office of Tax and Revenue last week and, on Tuesday, they launched an effort to lobby D.C. council members.

“None of us in the yoga community think the purpose is physical exercise,” Richard Karpel, president of Yoga Alliance, told CQ Roll Call in a recent phone interview. He later said, “Yoga is the union of the body, the mind and the spirit … The idea, when you practice yoga, is to create that union.”

The Washington Post also has a nice info piece on the tax. It includes this:

Q. Why do yoga studios meet this definition?
A.  The language of the imposition statute includes in the definition of health clubs “other facility[ies] for the purpose of physical exercise.”  This language is broad enough to cover yoga studios.

It looks, from the Post piece, like there are some fairly obvious work-arounds. Maybe not so much for a dedicated yoga studio, though.

And for everyone who doesn’t live / work in D.C., here’s a reason to pay attention to this story: Your city could be the next one to figure it needs more revenue and look to a similar tax. If that gets you worked up, check our Tim Miller’s latest — on “at-one-ment.”

Posted by Steve

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Tax yoga in Washington, D.C.? Over our savasanas, yogis say

For a second time, city leaders in the U.S. capitol are trying to squeeze a little more tax money out of some of the city’s fittest workers.

That’s the gist of a proposal to tax yoga studios and gyms, along with other “service providers” — i.e. barbers and hair salons, bowling alleys and car washes.

The yoga community there, apparently, isn’t taking it in savasana. Here’s the Washington City Paper’s coverage:

In 2010, then-Mayor Adrian Fenty proposed a similar tax on gym services, and hundreds of people rallied against the tax. The tax didn’t survive.

Will this one? The industries involved aren’t any happier about the proposed tax four years later. Vida Fitness announced that it plans to lobby against the proposal. It told people to contact their councilmembers to say they oppose it. There’s a #nodcyogatax Twitter hashtag going around, a Facebook group, and a petition on Change.org urging the Council to kill the tax.

On June 3, there’s a planned flash mob, in which participants will form a “burpee fence” around the Wilson Building and drop and do eight burpees for the city’s eight wards, says Graham King, the owner of Roam Fitness who started the Facebook group, in a post on its page.

I’ve been involved, in California, in discussions about changes to the tax code. Like most issues, it isn’t as simple as either side would want you to think. Services are an untaxed part of the economy, which — one can argue — is unfair to those businesses that have to pay taxes: manufacturers and sellers. I’ve heard people say that services shouldn’t be taxed because the people providing the service pay income taxes, but that’s true of the workers on an assembly line or in a clothing store (as well as the owners).

The problem, as far as I can tell with this specific proposal, is it is a tax increase solely, without any other benefit. Better proposals I’ve heard involve adding a tax on services but also lowering other taxes in ways that offset that (such as lower income or even sales taxes). And having taxes on sales and services make up more of a tax base is, typically, more stable and less prone to huge booms and busts than income taxes. (That’s been a huge problem in California.) Typically there’s also a minimum earnings cutoff — which might exclude a lot of yoga teachers.

There’s also this little coincidence: Washington this past week was named the healthiest city in the U.S. And this tax would hit the gyms and yoga studios that helped enable that — and all the corresponding societal benefits.

Sort of the opposite of a Sin Tax.

Posted by Steve