Benjamin Franklin famously wrote, “In this world, nothing can be said to be certain except death and taxes.”
Every April, Americans endure the annual ordeal of paying their income taxes, but that’s a relatively recent phenomenon. In fact, many of the methods the government uses to separate Americans from their money are fairly new. And while most taxes are pretty boring, ever since the Colonial rebels launched a tax-based revolution with the Boston Tea Party in 1773, some odd, unusual and maddening taxes have popped up.
Last updated: Oct. 10, 2019
Playing Cards Tax
Most people play cards for fun, but cards are also used for gambling. Maybe that’s why the state of Alabama charged a 10-cent tax per pack on this otherwise innocuous form of entertainment. The state saw the error of its ways in 2015 when it repealed the tax.
Before recent shifts toward a more liberal attitude about marriage in this country, the state of Missouri tried to encourage single men to tie the knot as quickly as possible — by taxing them. In 1821, Missouri passed this so-called “bachelor tax,” charging $1 annually to single men between the age of 21 and 50. The bachelor tax is no longer enforced.
In 1998, the Internet Tax Freedom Act (ITFA) made it illegal for states to charge sales tax for internet use. Wisconsin wasn’t ready to give up that tax, however, and was able to secure an exemption as one of the few states that are allowed to tax internet access. The tax is in effect through June 30, 2020.
A Not-So-Temporary Alcohol Tax
A tax on alcohol isn’t unusual, but in Johnstown, Pennsylvania, it’s taxed at an exorbitant 18%. The tax dates back to 1936 when the city experienced a devastating flood.
To pay for necessary repairs, the city created a new tax law that raised the alcohol tax temporarily to 10%. Even though the repairs were completed by 1942, the city never repealed the tax. Worse, it was increased to 18% in 1968.
In New Hampshire, a state full of quarries and gravel pits, residents can expect to pay an excavation tax for any cubic yard of the earth that is excavated. The goal of this tax is to make sure that industrial operations pay their fair share. You can’t even give away dirt for free — you’ll owe taxes on any dirt you dig up.
Whether you like to let your inner Katniss Everdeen fly for sport or fun, buying arrows come at a cost. You’ll have to pay a federal excise tax of 51 cents for arrows that are 18 inches or longer.
Premade Food Tax
The state of Michigan inadvertently encourages making food from scratch by how it taxes food — your premade apple pie is taxed, but a bag of apples and the flour to make it isn’t. That’s because Michigan taxes prepared food but not unprepared food.
The Income Tax
Parting with a portion of your paycheck is a fact of modern American life, but it wasn’t always that way. In fact, income taxes were once illegal. The income tax was first levied as a temporary emergency to pay for the Civil War and was disbanded at war’s end — but the seed was planted.
The 1894 Revenue Act sought to institute a permanent income tax, but a 19th-century dream team of lawyers spent $1 million to fight the law on the grounds that it amounted to an unconstitutional direct tax. A sharply divided Supreme Court sided with the plaintiffs and the income tax was deemed illegal. In 1913, however, the 16th Amendment nullified the ruling and ushered in the era of a ritualized annual tribute to the federal government.
94% Wartime Tax
Wars aren’t cheap, and the Civil War was far from the only conflict that forced the U.S. government to ask its citizens to reach for their wallets. In 1916, the highest tax rate jumped to 15% to help fund World War I. As the war dragged on, the tax climbed to 67% and then to 77%.
An astronomical 77% tax rate, however, became a fond memory in 1944, when the highest earners were forced to pony up 94 cents on every dollar of taxable income over $200,000 as the government struggled to pay for World War II.
Some behaviors and products are perfectly legal but frowned upon, making them easy targets for so-called sin taxes. Tobacco, alcohol, gambling and, where it’s legal, prostitution are the easy and obvious targets.
Governments collect hefty sums from sin taxes, which are often enacted under the camouflage of the moral high ground — these taxes, you’ll hear, are for your own good. The logic is that sin taxes can financially bleed people into abstaining from or at least consuming in greater moderation things deemed bad for their body and character. In essence, governments pad their coffers with steep sin taxes under the guise of saving people from themselves.
Sin taxes have long targeted things associated with vice, addiction and human frailty. As sugar has become the main villain in the obesity epidemic, some governments have taken the opportunity to disproportionately tax sugary drinks under the guise of the public good.
Four California jurisdictions currently levy a 1-cent-per-ounce soda tax, but residents there get off easy. Philadelphia charges 1.50 cents per ounce, Seattle charges 1.75 cents per ounce and soda will cost you 2 cents per ounce in Boulder, Colorado.
The New York Sliced Bagel Tax
Many jurisdictions tax prepared food, like the kind you buy in restaurants, at a higher rate than the staples on your grocery list. New York is famous for its bagels, but adding cream cheese or other toppings moves bagels from bakery food to restaurant food, which is taxed at a much higher rate.
In 2010, the Empire State was drowning in a nearly $10 billion deficit. New York changed the tax code, so the simple act of slicing a bagel for a customer before putting it in a bag classified it as “prepared.” Sliced bagels cost about 8 cents more than the unsliced version of New York’s most famous breakfast bread.
The Tennessee Dope Tax
Al Capone was famously convicted not for running a murderous crime syndicate, but for failing to pay income taxes. You can’t, after all, pay taxes on illicit income — or can you? The Tennessee Department of Revenue levies an “Unauthorized Substances Tax,” which taxes illegal drugs and “certain illicit alcoholic beverages” in what has long been moonshine country.
The idea is that drug dealers and moonshiners can anonymously pay a tax upfront to receive stamps, which they can then stick onto their black-market products to prove they’ve squared up with the state. There is no word on how the tax is enforced.
Illinois Candy Tax Double Standard
There’s nothing unusual about states taxing candy, but in Illinois, not all candy is treated the same way. A Twix, for example, comes with a 1% sales tax, but if you’re hungry for a Snickers, be prepared to pay 6.25%. That’s because Illinois, which has one of the country’s most complex tax codes, exempts candy that contains flour as an ingredient.
Connecticut Diaper Tax
In 2018, penny-pinching parents in Connecticut got some welcome news when the state overturned a controversial mandate that hit disposable diapers and feminine hygiene products with an extra tax. The policy had been especially hard on one of the state’s most vulnerable demographics — struggling single mothers.
Alabama’s Confederate Veterans Tax
The Civil War has been in the history books for more than 150 years, but Alabama residents still pay a tax originally designed to finance Confederate veterans’ pensions. The state’s last Confederate veteran died in 1934. But the tax is still levied, with all proceeds going to maintain a single public space.
Confederate Memorial Park — and its ocean of waving Confederate flags — gets hundreds of thousands of dollars a year from the tax. That makes it one of the best-funded public spaces in Alabama.
Maryland’s Flush Tax
In 2004, the state of Maryland issued what was instantly dubbed the “flush tax,” which added an extra fee for water. Millions of flushing toilets had contributed to elevated nitrogen and phosphorus levels in the Chesapeake Bay.
Revenue from the so-called flush tax helped fund new and upgraded waste treatment plants. The effort worked, and 15 years later, the dead zones that plagued the bay have largely been revitalized with marine life, including Maryland’s famous blue crabs.
Maine’s Blueberry Tax
Blueberries are one of Maine’s biggest agricultural exports, and the little blue fruit had lawmakers seeing green in the late 1990s. That’s when the state levied a tax of 1.5 cents per pound of blueberries. The tax is paid by anyone who sells, processes or ships blueberries.
Body Art Taxes
In some states, altering your body is a taxable endeavor. States like Connecticut tax tattooing services, and others like Minnesota tax body art indirectly by taxing necessary equipment like tattoo guns, ink and cleaning agents. A few other states tax body piercings and some even levy taxes on permanent makeup.
Double (and Triple) Dipping on Marijuana Taxes
The War on Drugs can be traced to the Marihuana Tax Act of 1937, which didn’t outlaw pot outright but set the stage for its criminalization. Now that recreational use is legal in about one-fifth of America, states have come up with several ways to cash in.
Most states tax the retail sale of pot, just as they do alcohol. But some states also tax transactions between growers and distributors as well as between distributors and retailers.
Hawaii’s General Excise Tax
There’s a price to living in paradise or even visiting, for that matter. Hawaii doesn’t have a sales tax. But virtually everything a person eats, drinks, buys or does in Hawaii — already one of the priciest states in America — costs extra thanks to what’s called a “general excise tax.”
Kentucky Horse Tax
The thoroughbred horse industry is big business in the state that bears the name of the world’s most famous race, the Kentucky Derby. And the Bluegrass State’s government gets its share. Kentucky levies a sales tax against the breeding fees paid to the owners of male thoroughbreds.
Minnesota’s Fur Coat Tax
Known for some of the coldest winters in America, Minnesota doesn’t charge sales tax for outerwear like coats — unless the coat was once an animal. Sales tax applies to a “fur coat from pelts, or gloves or a jacket from a hide,” provided the fur portion costs three times more than the next most expensive tangible material.
Utah’s Birthday Suit Tax
If you buy food or drinks, pay a cover charge or buy “tangible personal property” in Utah, you can expect to pay more if the person on the other end of the cash register isn’t fully clothed. The state levies a special tax on top of sales tax for all goods and services occurring in “a business with nude or partially nude individuals.” Utah claims to use that revenue to rehabilitate convicted sex offenders, but there’s no word on what tangible personal property could possibly be purchased at a strip club.
California Vending Machine Tax
California generously exempts items like cold food, hot drinks and fruit juice when sold at the grocery store. But these items are taxed when they’re sold in vending machines. Vending machine owners must pay tax on 33% of their receipts for selling those exact same products — and that tax, of course, is passed on to you.
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Jordan Rosenfeld contributed to the reporting for this article.
About the Author
Andrew Lisa has been writing professionally since 2001. An award-winning writer, Andrew was formerly one of the youngest nationally distributed columnists for the largest newspaper syndicate in the country, the Gannett News Service. He worked as the business section editor for amNewYork, the most widely distributed newspaper in Manhattan, and worked as a copy editor for TheStreet.com, a financial publication in the heart of Wall Street’s investment community in New York City.