The Tax Code: A Trial by Tampon

The issue of the “tampon tax” has gained prominence over the past year.  A Change.org petition started by Cosmopolitan magazine gathered nearly 44,000 signatures, while a similar petition in Europe has over 312,000 supporters. Last year, the Canadian government dropped the tampon tax by removing the GST on products that are “marketed exclusively for feminine hygiene purposes.” French lawmakers followed suit in December by cutting the VAT on sanitary products from 20% to 5.5%.

President Barack Obama commented on the issue during a series of interviews this month by YouTube creators Destin Sandlin, Ingrid Nilsen and Adande Thorne. Nilsen asked the president, “Why do [tampons] continue to be taxed?” President Obama  responded with, “I suspect it’s because men were making the laws when those taxes were passed.”

The campaign to repeal the tax has finally gained some traction in the state legislatures.

The California State Board of Equalization unanimously agreed to back a bill recently introduced by two members of the state assembly, Cristina Garcia and Ling Ling Chang. The measure would exempt tampons and menstrual pads from state sales taxes. A few other states – Utah, Virginia and New York – have introduced similar bills.

While women everywhere would love to have the tax on tampons removed, this protest is not without precedent.

Most sales taxes, including California’s, exempt items that are considered “necessities”. Out of the 45 states that collect sales taxes, only 13 of them charge it on groceries, and only one state charges it on prescription drugs. Legislators exempt necessities items to shield lower-income consumers from taxes on the things they must buy in daily life — like food. Some states exempt clothing from their sales tax base and only 22 states tax fitness services.

In addition to the argument that tampons are a necessity, some argue that the tax unfairly adds to the economic burden of women, and point to studies suggesting that women get paid less than men in comparable positions and are charged higher prices for similar items and services. Others say that taxing tampons is just another example of gender bias. Even President Obama, by pointing to male lawmakers, seemed to agree with that line of thought.

So why shouldn’t tampons get the same tax break as other necessities? And besides the usual bureaucratic crawl, why are other states taking so long to get this tax removed?

Five states have already created tax exemptions for tampons. One of them – Pennsylvania – included a tax break for toilet paper and diapers because these are items that also seem pretty necessary.

So the first problem that legislators face is defining “necessity”. Food may be a necessity, but not all types of food are tax exempt.

For instance, some states exempt candy. The Washington Department of Revenue had to then define the difference between candy and candy-like items. This resulted in candy bars containing flour – Kit Kats –not being taxed, while ones without flour – 3 Musketeers – are.

Furthermore, most states want to continue taxing takeout and other prepared foods, on the grounds that having someone else cook for you is a luxury. As a result, they need to define what is, and is not, a prepared food.

So in 2010, Wisconsin’s revenue department released a 1,400-word memo called, “Sales of Ice Cream Cakes and Similar Items.” Like the difference between candy and candy-like items, the answer is pretty arbitrary.  Does the cake seller also provide forks? Who decorated the cake? Does a majority of the cake’s layers contain flour?

This absurdity is not confined only to the United States. In Britain in 2012, the government sought to simplify its prepared food rules by declaring all foods sold above ambient room temperature to be subject to tax. Prime Minister Cameron was forced to withdraw the proposal over outrage that traditional English meat pies would be taxed.

As you can imagine, the complexity of the tax code also applies to toiletries. The California bill proposed by Garcia and Chang tries avoids this ambiguity by creating a single exemption for “sanitary napkins and tampons,” rather than for broad category. Nevertheless, it’s easy to see that the tampon debate opens floodgate to arguments that toilet paper, diapers, soap, toothpaste, and a whole slew of other items should also be exempt.

Another problem is the loss of revenue from further tax exemptions. California already has a list of over 100 existing exemptions to the state’s sales tax and as noted before, there’s no clean cut way to exempt only tampons and nothing else. The more items exempted, the more the state needs to figure out where to make up the loss and that means budget cuts for state sponsored programs.

Of course it’s more than just exemptions that cut into the sales tax base. Think of everything being taxed by default and then you start chipping at the base by making new exemptions. Then you don’t expand the base by not taxing new types of sales – like online sales and sales of services. Most services are exempt, in part because many – housing, medical care and education – can also be counted as necessities. Things get even more difficult when you consider the states that consider fitness services (gym memberships) tax exempt.

So while, current legislators may agree with removing the tampon tax, the reality of how they’re going to do it is long and tedious. Are tampons a necessity? Most women would say yes. What other items can then be concluded to be a necessity? Almost all toiletries. Does the government have an alternative revenue stream? The government gets most of its money from taxes and if one type of tax goes down then either another type goes up – like income tax – or government programs get cut – hopefully not public school funding.