Missouri Starts Taxing Yoga Classes

November 6, 2009

Missouri Starts Taxing Yoga Classes

The Kansas City Star reports that on Sunday, the state’s Department of Revenue began enforcing a 4-percent tax on yoga and Pilates classes. Why the change? Missouri officials have decided that yoga and Pilates are places of “amusement, entertainment or recreation” and therefore taxable, rather than spiritual practices that are untaxable. Unsurprisingly, there is already an uproar:

“The practice of yoga in a studio setting is a spiritual practice, and is not done for entertainment,” said Michael Shabsin, a St. Louis area lawyer and yoga instructor.

Shabsin said he is leading an effort to clarify the legal definition for places of amusement, entertainment or recreation and exclude yoga-specific studios. That effort could include legislative proposals and lobbying, he said.

Whether one believes yoga to be spiritual or recreational, should the government really be making that distinction for us? And, for that matter, with obesity wreaking havoc on the nation’s health care system, should the state be discouraging those who use yoga for health or weight loss? A Department of Revenue spokesman says they’re just trying to make applications of the tax fair for everyone. But it seems here that taxing yoga classes isn’t fair to anyone but the Department of Revenue.

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8 Comments »

I have to disagree with you, Kristen. Since the question at hand is one of tax exemption, it is indeed the government’s job to decide for us whether it is spiritual or recreational for the purposes of taxation. Just because I think drinking beer in my hot tub is somehow spiritual to me does not mean I get to decide whether the land upon which my hot tub sits is tax exempt. (That is not meant to belittle yoga at all, just to demonstrate through an absurd example that someone has to decide what is what.)

There are lots of tax exempt entities in Missouri, especially for purposes of property taxes, and I don’t think all of them deserve to be tax exempt. As we remove entities from the tax rolls, we make the burden larger on the remaining taxpayers. Now, would I love to see a greatly reduced government sector which might make all this moot? Of course, but that is not how it works right now. Taxes should be spread more evenly and be lower for everyone, not higher for most people or businesses because a few of them succesfully claim property or sales tax exemptions in Missouri.

I think many more service businesses, including yoga classes, should be charging sales taxes if we can follow the state fair tax plan and replace the state income tax with higher and broader sales taxes.

Comment by David Stokes — November 6, 2009 @ 3:16 p.m.
[...] My latest post on Show-Me Daily deals with Missouri’s decision to start taxing yoga classes as a recreational rather than [...]

Pingback by Yoga taxation on Show-Me Daily « Missouri Women's Forum — November 8, 2009 @ 4:14 p.m.
Don’t listen to him Chaya. I heard this guy personally requested that govt agents intervene if a citizen smokes in a private business. Zero credibility.

Anyway, the 4% tax has definitely pushed this marginal consumer of yoga classes out of the market.

Comment by vroman — November 8, 2009 @ 10:35 p.m.
Well, that is certainly an attitude that is going to advance your libertarian beliefs in society and democracy. “Somebody disagrees with me on one issue (and probably a few more). Cast them aside forever. All their credibility is gone. They are now the enemy.” Thinking like that is guaranteed to keep your party (using the term very loosly) at about 1% of the vote forever. But at least you’ll enjoy your ideological purity while your taxes go through the roof and your health care gets socialized.

Why don’t you actually tell me why you think some things should be exempt from taxation and others taxed more highly as a result, as opposed to taxing more things broadly and lowering the rates for all of them as a result. The state’s Hancock amendment prohibits the state from raising too much total revenue (Thank God), so if Missouri greatly expanded the items it taxed it would be forced, at some point, to lower the rates or return the money for taxpayers.

Comment by David Stokes — November 9, 2009 @ 11:18 a.m.
I’m with David Stokes here. The distortion in consumers’ choices caused by these arbitrary exemptions is itself a kind of tax on the economy.

Comment by Sarah Brodsky — November 9, 2009 @ 11:31 a.m.
I kid. Come on, you knew that was coming.

“Why don’t you actually tell me why you think some things should be exempt from taxation and others taxed more highly as a result, as opposed to taxing more things broadly and lowering the rates for all of them as a result.”

Assuming that each scheme generated same govt revenue, I do prefer the ‘exemptions’ model.

Besides the direct loss from paying taxes, the overhead of hiring accountants/lawyers to comply w taxes at the minimal rate possible, is an additional cost. Also enforcement costs for non-compliance has reduced pool of potential targets. Thus, if taxes were concentrated in only a few industries, the amount of deadweight loss to tax-compliance-overhead is reduced, and society as a whole suffers less net loss.

Comment by vroman — November 9, 2009 @ 1:35 p.m.
Question: Will the yoga feature on Wii Fit be affected?

Comment by Jake Voss — November 9, 2009 @ 3:16 p.m.
I failed to realize it was kidding, but I am glad to know it and I am happy to belatedly rescind the caustic tone of my own comment.

You raise a number of great points about exemptions and compliance costs, etc. I would like to point out that the taxes at the base of the original post, local sales and property, have decidedly lower compliance costs then corporate or personal income taxes, capital gains taxes, etc. Sales taxes can have a substantial cost to get started, but after that the collection and remission of them is fairly simple. Property taxes (if you agree with the assessment, which is a huge “if”) also have a generally low compliance cost of one payment at the end of the year. These types of taxes tend to get complicated exactly when you get to the point of TIF, abatements, etc, which require a lot more work by attorneys, accountants, etc. to make sure the business gets full credit for whatever the gov’t gave them credits for.

Comment by David Stokes — November 9, 2009 @ 5:04 p.m.

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I have to disagree with you, Kristen. Since the question at hand is one of tax exemption, it is indeed the government’s job to decide for us whether it is spiritual or recreational for the purposes of taxation. Just because I think drinking beer in my hot tub is somehow spiritual to me does not mean I get to decide whether the land upon which my hot tub sits is tax exempt. (That is not meant to belittle yoga at all, just to demonstrate through an absurd example that someone has to decide what is what.)

There are lots of tax exempt entities in Missouri, especially for purposes of property taxes, and I don’t think all of them deserve to be tax exempt. As we remove entities from the tax rolls, we make the burden larger on the remaining taxpayers. Now, would I love to see a greatly reduced government sector which might make all this moot? Of course, but that is not how it works right now. Taxes should be spread more evenly and be lower for everyone, not higher for most people or businesses because a few of them succesfully claim property or sales tax exemptions in Missouri.

I think many more service businesses, including yoga classes, should be charging sales taxes if we can follow the state fair tax plan and replace the state income tax with higher and broader sales taxes.

Comment by David Stokes — November 6, 2009 @ 3:16 p.m.

[...] My latest post on Show-Me Daily deals with Missouri’s decision to start taxing yoga classes as a recreational rather than [...]

Pingback by Yoga taxation on Show-Me Daily « Missouri Women's Forum — November 8, 2009 @ 4:14 p.m.

Don’t listen to him Chaya. I heard this guy personally requested that govt agents intervene if a citizen smokes in a private business. Zero credibility.

Anyway, the 4% tax has definitely pushed this marginal consumer of yoga classes out of the market.

Comment by vroman — November 8, 2009 @ 10:35 p.m.

Well, that is certainly an attitude that is going to advance your libertarian beliefs in society and democracy. “Somebody disagrees with me on one issue (and probably a few more). Cast them aside forever. All their credibility is gone. They are now the enemy.” Thinking like that is guaranteed to keep your party (using the term very loosly) at about 1% of the vote forever. But at least you’ll enjoy your ideological purity while your taxes go through the roof and your health care gets socialized.

Why don’t you actually tell me why you think some things should be exempt from taxation and others taxed more highly as a result, as opposed to taxing more things broadly and lowering the rates for all of them as a result. The state’s Hancock amendment prohibits the state from raising too much total revenue (Thank God), so if Missouri greatly expanded the items it taxed it would be forced, at some point, to lower the rates or return the money for taxpayers.

Comment by David Stokes — November 9, 2009 @ 11:18 a.m.

I’m with David Stokes here. The distortion in consumers’ choices caused by these arbitrary exemptions is itself a kind of tax on the economy.

Comment by Sarah Brodsky — November 9, 2009 @ 11:31 a.m.

I kid. Come on, you knew that was coming.

“Why don’t you actually tell me why you think some things should be exempt from taxation and others taxed more highly as a result, as opposed to taxing more things broadly and lowering the rates for all of them as a result.”

Assuming that each scheme generated same govt revenue, I do prefer the ‘exemptions’ model.

Besides the direct loss from paying taxes, the overhead of hiring accountants/lawyers to comply w taxes at the minimal rate possible, is an additional cost. Also enforcement costs for non-compliance has reduced pool of potential targets. Thus, if taxes were concentrated in only a few industries, the amount of deadweight loss to tax-compliance-overhead is reduced, and society as a whole suffers less net loss.

Comment by vroman — November 9, 2009 @ 1:35 p.m.

Question: Will the yoga feature on Wii Fit be affected?

Comment by Jake Voss — November 9, 2009 @ 3:16 p.m.

I failed to realize it was kidding, but I am glad to know it and I am happy to belatedly rescind the caustic tone of my own comment.

You raise a number of great points about exemptions and compliance costs, etc. I would like to point out that the taxes at the base of the original post, local sales and property, have decidedly lower compliance costs then corporate or personal income taxes, capital gains taxes, etc. Sales taxes can have a substantial cost to get started, but after that the collection and remission of them is fairly simple. Property taxes (if you agree with the assessment, which is a huge “if”) also have a generally low compliance cost of one payment at the end of the year. These types of taxes tend to get complicated exactly when you get to the point of TIF, abatements, etc, which require a lot more work by attorneys, accountants, etc. to make sure the business gets full credit for whatever the gov’t gave them credits for.

Comment by David Stokes — November 9, 2009 @ 5:04 p.m.

November 6, 2009