How Is Art Handy Like a Diaper?
It was one thing when Representative Art Handy (D, Cranston) decried the injustice of the little known diaper-service tax shelter during his testimony supporting his Economic Death and Dismemberment Act. We could at least give him the benefit of the doubt that he was speaking extemporaneously. But he apparently liked the image so much that he’s used it in a Providence Journal op-ed:
The act would also bring our sales tax into the 21st Century by expanding it to include certain services. Just think about a mom who buys diapers at the local market. On a $10 bag of diapers, she’ll pay 70 cents in sales tax. But a mother who can afford the luxury of a service that picks up her dirty diapers, launders them, and delivers them back to her door pays no tax at all.
As a basic factual matter, Handy is wrong. Diapers are non-taxable in Rhode Island. (Perhaps he ought to take that up with his local market.)
As a conceptual matter, he’s wrong again. The money paid for a person’s time spent laundering cloth diapers is taxable as income. The delivery vehicle’s gas is also taxed, and any number of things — from property to supplies — are taxed, as well. The service provider doesn’t just eat those costs.
As an economic matter, he’s short-sighted. As the previous paragraph implies (and as I’ve said before), the wealthy person who hires a diaper cleaning service creates a job. That’s why it’s a service: because somebody has to do it, and more likely than not, that somebody falls in the income range that Handy claims a desire to protect.