5 Bizarre U.S. Tax Laws
In your years as an accountant, you’ve likely come across tax laws that have left you furrowing your brow and shaking your head. It’s easy to get frustrated by our nation’s complex tax code, but where’s the fun in that? This month, we’re taking the edge off with a look at five of the most bizarre tax laws still in existence in the United States.
Michael Jordan’s Revenge Tax
More than a dozen states have enacted a jock tax, which collects taxes from professional athletes who earn income in that state as part of their competitive schedule. Though the jock tax has been around since the 1960s, it wasn’t until 1991 that it was actively enforced. That year, the Chicago Bulls famously dethroned the Los Angeles Lakers, and the State of California informed Michael Jordan he would owe state taxes for the days he spent in L.A. Illinois responded by levying a jock tax on athletes from any state that imposed a tax on their athletes. The policy became known as “Michael Jordan’s Revenge.”
The Bachelor Tax
Single? You may not want to move to Missouri. Unmarried men between the ages of 21-50 are required to pay an annual $1 tax to the state. The law dates back to 1820, when the value of that dollar was equal to about $20 today. Similar taxes have existed throughout history in other countries, usually to encourage marriage.
The Candy Tax
In Illinois, candy is taxed at the regular sales tax rate of 6.25%, while other food items are taxed at only 1%. Taxing candy isn’t out of the ordinary, but what is strange is how Illinois defines candy. Beer Nuts? Candy. Nestle Crunch bars? Not candy. Apparently, it all comes down to flour. A Crunch bar isn’t candy because it contains flour, but a bag of Bloomington-made Beer Nuts is candy because the nuts are coated with a sweetener. Confusing, right?
The Rent-a-Cow Tax Break
Florida’s greenbelt law was enacted to encourage the preservation of farmland by taxing it at a special, low rate. But some of the law’s largest beneficiaries are big-time developers who rent their land to cattle ranchers while preparing to build, often saving them hundreds of thousands of dollars in property taxes. Even Walt Disney World took advantage of this loophole and saved $1.5 million as a result.
The Bagel Tax
New York is often described as the holy grail of bagel perfection… with one exception: the price. Whole, unsliced bagels are exempt from New York state sales tax. But if you want it sliced, toasted, or slathered with schmear, you’ll get smacked with an 8.875% sales tax. Why? Because legally speaking, altering a bagel in any way reclassifies it from a bakery item to a restaurant item, which is subject to sales tax. The state began enforcing this legal distinction in 2010 in an effort to relieve the state’s nearly $9.2 billion deficit.
A Taxing Job
A career in accounting can take a mental toll, especially during tax season (thank goodness it’s finally over!). Sometimes, you just have to lighten up and laugh at the industry’s bizarre complexities. After all, laughter is the best medicine!
What are the weirdest tax laws you’ve come across? Let us know in the comments!