New to state’s shell game: a cosmetic-surgery tax

Remember going to the state fair and seeing the carnival huckster playing the shell game? He would put a bean under one of three shells, deftly move them around on the tabletop, then ask you to guess which shell contained the bean. What he knew and you didn’t know was that he had long since palmed the bean and it wasn’t under any of the shells.

This is what our Legislature’s Taxation Committee has just done with the new proposed “tax reform” measure now before the entire Legislature. Before you say, “But wait, aren’t we supposed to get property tax relief from this package?”, read on. Among the many new taxes being imposed on an unsuspecting public, including beauty salons, a variety of home improvement professions (e.g. plumbers, electricians, carpenters, landscapers), will be a tax on elective cosmetic surgery.

This action carries the state of Maine into entirely new territory by placing a sales tax on the services of a medical professional – as if the cost of medical care isn’t already high enough. There is only one state to have passed such legislation, New Jersey, during the waning hours of a legislative session with no prior warning or notification, and signed into law by a soon-to-be disgraced governor, Jim McGreevey. It turns out that the New Jersey legislators have some regret over this law and have been trying to get it repealed. Actual collections on the tax have fallen far short of projections (a 69 percent shortfall in the first year) and the legislators have been catching heat from their constituents. They thought they were simply taxing the rich when, in fact, 86 percent of cosmetic surgery patients are working women with median incomes.

Because this is elective surgery and paid for out of pocket, patients have considerable choice of physicians and locales. In New Jersey, studies have shown that for every dollar collected, the state has lost $3.39 in state revenue, not to mention the “hassle” factor in determining which procedures are “cosmetic.” Are they simply going to rely on the 15 or so plastic surgeons practicing in Maine to make this determination in their offices, or are we looking at the formation of a new state agency (more hired state employees) to oversee the practices of these 15 surgeons? And what about the gray areas between reconstructive and cosmetic surgery as well as the federally mandated patient privacy issues? They will have to include a plastic surgeon on that review panel.

I didn’t come to Maine to focus on a cosmetic surgery practice. In the early years, I would have packed my bags and left for greener pastures had I tried to make a living from this aspect of plastic surgery. Like most plastic surgeons (90 percent), I do a blended practice of cosmetic surgery, hand surgery, congenital facial deformities, reconstruction following mastectomy, and skin cancer surgery involving facial reconstruction.

At this point, with increasing numbers of patients on either Medicare or Medicaid (MaineCare), cosmetic surgery allows me to continue serving this population. I’m not sure what the Taxation Committee was thinking for revenue from this tax, but based on the New Jersey experience, the state might expect one-tenth of the receipts or less realized by New Jersey, based on its population and the number of plastic surgeons practicing there. That would put less than $800,000 in their coffers for all their efforts.

Getting back to the shell game, once the state has passed the property tax exemption back to the towns, now reported to go as high as $20,000, what’s to prevent the towns from simply reassessing the properties, canceling the effect of the exemption? That’s been my experience, how about yours?

You’ll simply be paying more for all the services that have previously been exempt, and your property taxes will be the same or go up as well.

Dr. John R. McGill has practiced plastic surgery in Bangor for the past 29 years and is past president of the Maine Medical Association. He is a delegate to the AMA representing the interests of the American Society of Plastic Surgeons.