Sex and Taxes
Sex and Taxes

Economic texts highlight the problem with national accounting by pointing out that if you clean your house it is not counted in the national accounts or taxed. But if you hire a housekeeper the activity gets counted in the national accounts and is taxed. Instead of housekeeping think of sex, it’s much more fun than cleaning.

If you have sex with your partner, a stranger or White House intern it is not counted as economic activity in the national accounts or taxed. But if you purchase sex then it is counted and taxed, even in States where prostitution is illegal!

Sex or the lack of it can have a big impact on people’s well-being. Any realistic attempt to measure social welfare has to incorporate the whole of this fundamental human activity, not just that part of it which is bought. This is particularly obvious when dating is factored in. The cost of meals at fine restaurants and drinks purchased at a bar or night clubs are counted in the national accounts and taxed. But not if the candle lit dinner is prepared at the home.

Then there are “one man prostitutes”. Yes I know it is a sexist term and that in today’s world it can be just as applicable to say “one woman prostitutes”. But I am reliably informed that the latter is a common term in use in Austria. Just in case it is not self-explanatory it refers to women who marry or date someone for their money. In effect they sell their company and body to their spouses for access to their money. Basically it is just another form of prostitution, but one that is not counted in the national statistics or taxed.

Clearly current taxation and national accounts systems are full of inconsistencies and almost meaningless. Something must be done. The answer is obvious. Taxes on services must be extended to all services, including sexual services provided outside the marketplace. There can be set rates for different sexual services and these can be assessed on the basis of those currently charged in the market. In effect this means that every discrete aspect of the sexual act can be assessed on the basis of what it is worth in the market and taxed accordingly.

Some might regard the taxman sticking their noses into people’s bedrooms as a gross intrusion of privacy. But it differs little in principle than their sticking their nose into the rest of your business. In Australia there is a legislative impost on organizations to spend a certain amount of their payroll on the training of their staff. Now that non-market services are being incorporated into the formal system of accounting and taxation this can be extended to cover them.

If government obliges brothels to spend a proportion of their income teaching their staff how to be better hookers, then this should be extended to the informal sector. The current lack of training centers for such an important human activity clearly indicates the existence of market failure. The private sector under-invests in sexual training because it does not take into account the social benefit arising from copulating couples outside the marketplace. This market failure justifies government intervention in public health, education and a plethora of other areas. It also does so for sex.

Sexual training ought to be compulsory and provided free if charge at the point of use. Everyone has as much right to know how to fornicate as read. Poor readers get access to subsidized lessons and so should poor fornicators. Theses programs can be funded by part of the revenue accrued from the “sex tax”. Thus those who get the most out of sex will also pay the most to maintain the system. However, on the grounds of equity the rate will also have to be variable to ensure that all benefit to the same degree from sex.

Income and sex both satisfy human wants. If there is merit in the governments acting to equalize the level of one, then there is merit in it acting to equalize the level of the other. The United Nations and others produce regular reports highlighting the unequal distribution of income in societies. But they have ignored the equally important and almost certainly inequitable distribution in the level of sexual activity. The government must do something.

Those living in sexual poverty could get assistance in the form of a weekly or fortnightly taxpayer funded visit from a prostitute. Just as they currently get assistance in the form of hand-outs to relieve their fiscal poverty. While the stinking rich, in sexual terms, can get taxed heavily. A refinement of the system trialed by Caligula in ancient Rome could be introduced.

Caligula forced Senators’ wives to act as prostitutes and used the revenue raised to fund his other commitments. The government can do something similar to the sexually active. Just as it takes money from those overly endowed with income to distribute to those it believes in need, so it can do the same for their sex lives. Naturally these can all be assessed at the prevalent market rate and incorporated in calculations of the nation’s GDP.

The revenue boom from better taxing the consumption of goods and services will allow for the continued provision of social services. This includes health and childcare along with other activities that were once primarily provided by the private sector. The British Governments refusal to fund the distribution of Viagra on the National Health Service highlights the need for reform.

Viagra helps people get erections and have sex. Obviously its consumption impacts beneficially on peoples’ level of well-being. But this component of well-being is not counted in the National Accounts or taxed. The British government therefore saw no upside in helping people access the product to enhance their sex life. Currently providing the product increases government expenditure without generating any measured benefit. But with a broad based consumption tax revenue from increased sex offsets the cost of providing the product. It also increases GDP, something government’s aim for.

US President Clinton got himself into trouble for having oral sex with an intern. This would not be a problem under a proper broad-based consumption tax. The President and Ms Lewinsky would have had to declare the number of blowjobs given and received and pay taxes on them. Thus there would have been no need to decide if he ought to be removed from office for committing perjury. Either no offence would have been committed or he would have been guilty of tax evasion. The latter, is of course, the offence used by the US authorities to get Al Capone.

Perhaps the President was considering such a tax and made Ms Lewinsky ware of the fact. Her desire for a tax deduction being the reason she did not wash her cocktail dress. This also implies that she expected the tax to be retrospective. To be on the safe side it is probably best to start maintaining a detailed diary to refute tax officers claims about your sex life.

Clearly national accounting and taxation systems need to be amended to incorporate the impact of changing patterns of sex. The government already has the right to tax your labor and consumption activity. It already uses arguments based on “fairness and need” to interfere in the market and distort what you do. Taxing sex is no more ridiculous and based on the same fundamentally flawed principles.



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