The 11 Oddest Things America Has Ever Taxed

By Tim Lemke on 1 April 2016 0 comments

Taxes: No one really likes them. But they are something of a necessary evil if we want a functioning society.

That said, there are some taxes that seem objectively bizarre, often because of the item or activity that is taxed, or the seemingly inconsistent way it is applied. From bagels with cream cheese to cocaine cash and candy, here are some of the strangest things America has ever taxed.

1. The Kansas Balloon Tax

What's considered transportation, and what's considered "amusement?" That's the question when it comes to balloon rides in Kansas. If you're in a hot air balloon but it's tethered to the ground, the experience is taxed at a rate of 6.5%. But the Tax Foundation reports that if the balloon is set free, it means you're traveling from one place to another (technically considered "air commerce") and therefore the ride is tax-free. This tax also applies in Missouri and Wisconsin.

2. The Texas Belt Buckle Tax

Many states do not tax purchases of clothes. And Texas is one of these states — but your big Longhorn belt buckle doesn't apply. That's because, according to Pew Charitable Trust, the buckle is considered an "accessory, similar to a piece of jewelry." So add the Texas sales tax of 6.25%, and possibly 2% more in local taxes.

3. The Prepared New York Bagel Tax

If you're in New York, a bagel by itself is exempt from tax. But if you slice a bagel or smear anything on it, then it's a "prepared food" that's subject to an 8.875% sales tax. So keep that in mind the next time you want some cream cheese on your bagel. Americans for Tax Reform has called this tax "ludicrous."

4. The Inconsistent Candy Tax

It seems reasonable that a state might tax candy. But when is candy not candy? In Illinois, candy is taxed unless it's made using flour. (Because candy is, according to some criteria, defined by the absence of flour as an ingredient.) This means that a chocolate bar is not taxed, but a KitKat bar or Whopper malt ball is subject to taxation. Try keeping track of all this during Halloween and Easter.

5. The Goatee License Fee

In Massachusetts, there's still an old law that says a man can't wear a goatee unless he pays a fee to obtain a special license. Something tells me this law is no longer enforced. But maybe it's a good thing that full beards have made a comeback.

6. The Illegal Drug Income Tax

The Internal Revenue Service's actual written guidelines state that "Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040)." In other words, they expect you to pay taxes on any money you earn from doing things you shouldn't be doing. One wonders how much revenue the government has received due to this provision.

7. The Tax on Cup Sleeves and Lids (But Not Cups)

In Colorado, a cup is considered "essential food packaging," and is therefore exempt from tax. But the lid can be taxed. Same goes for the cup sleeve, if you want to protect your hand from hot coffee. And the coffee stirrer? That's taxable.

8. The "Rain" Tax

Okay, this is actually a bit of a misnomer. It's actually a tax or fee on homeowners to cover the costs of pollution from stormwater runoff. This was implemented in 2012 as part of an effort to prevent pollution from streaming from rooftops and into the Chesapeake Bay. Officially, it's known as a stormwater management fee, but opponents came to call it the "rain tax."

9. The Vending Machine Fruit Tax

In California, fruit is tax exempt. Unless it comes from a vending machine, in which case there's a 33% tax lumped on. This appears to be an unfortunate byproduct of the state looking to move people away from unhealthy vending machine foods like potato chips and candy bars.

10. The Alabama Playing Card Tax

Maybe there's a reason there aren't any casinos with table games in the Heart of Dixie. Up until last year, the state added 10 cents to the purchase of any deck of playing cards, a leftover of so-called "sin taxes" to discourage things like smoking, drinking, and gambling. What's interesting is that the tax law specified that the tax applied to decks of 53 cards or fewer, thus exempting cards for UNO and other similar games.

11. The Texas Strip Club Pole Tax

This made headlines in 2007, when Texas sought to install a $5-per-patron fee for entry into a business that has live nude entertainment and serves alcohol. The "gentlemen's club" industry argued that the tax was unconstitutional on free speech grounds, and others argued that it amounted to an illegal occupation tax. Courts have ruled against the clubs.

What's the strangest tax you've ever heard of? Please share in comments!

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