Marketplace: D.C. Makes the Case for Taxing More Services

By Kate Davidson, June 24, 2014

Yogis in Washington D.C. are taking deep breaths. Very deep breaths.

Partly because that’s what they always do. And partly because the D.C. Council is poised to give final approval Tuesday to a tax proposal that has yoga teachers and fitness buffs worried.

It also highlights the changing nature of the sales tax. The council wants to expand sales tax on the things we buy to include more services like gyms and yoga studios.

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“If you don’t tax services in the long run, you don’t have a sales tax. End of story,” says Matt Gardner, executive director of the Institute on Taxation and Economic Policy. He says states should tax more services, ideally at a lower rate. But broadening the tax base isn’t easy, he says.

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