Personal Finance > Taxes

Strangest taxes
You might pay taxes on illegal drugs, Pepsi, playing cards and being a star. And that's not all.
April 9, 2004: 2:56 PM EDT
By Jeanne Sahadi and Annelena Lobb, CNN/Money writers

NEW YORK (CNN/Money) You know taxes are a fact of life, or, as Oliver Wendell Holmes put it, "the price we pay for civilization."

But some of the things we're taxed on can seem oddly random, if not downright bizarre.

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In certain states and cities, you'll pay special taxes for buying a deck of cards, possessing illegal drugs and possibly buying things from those in the buff. The taxes aren't always levied directly on you but on the owner of a business you patronize. But businesses often find ways to pass that added cost onto customers.

Straight from the "Go figure" files, here are just 10 peculiar state and local taxes we found, courtesy of information from tax information publisher CCH, Inc. and the Tax Foundation, a nonprofit tax policy research group that advocates tax simplification measures.

Illegal drug tax: At least 11 states, including Alabama, North Carolina and Nevada, tax people who possess illegal drugs. Usually, though, you have to be in possession of a minimum quantity (for example, over 42.5 grams of marijuana in North Carolina) to be subject to the tax.

But no need to wait for the police to cuff you before you cough up the cash. In North Carolina, for instance, when you acquire an illegal drug (or even "moonshine"), you can go to the Department of Revenue and pay your tax, in exchange for which you'll receive stamps to affix to your illegal substance. The stamps serve as evidence you paid the tax on the illegal product.

Don't worry that you might get in trouble for admitting you have enough drugs to fuel a rave party for years. You needn't provide any identification to get the stamps and it's illegal for revenue employees to rat you out.

Still, according to North Carolina's department charged with collecting the unauthorized substance tax, only 77 folks have voluntarily come forward since 1990. Most of them are thought to be stamp collectors. (Or perhaps they were just high?)

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The majority of the $78.3 million the state has collected thus far has come from those who got busted and were found without stamps.

But even if they had had stamps, it's not like their legal troubles would be over. "Purchasing stamps only fulfills your civil unauthorized substance tax obligation," according to the N.C. DOR Web site.

Sex sales tax: Sin is getting pricier in Utah. Starting in July, owners of sexually explicit businesses where "nude or partially nude individuals perform any service" must pay a 10 percent sales and use tax on admission and user fees as well as the sales of merchandise, food, drink and services.

That means customers will likely get hit with it as well. And that would be on top of the 4.75 percent sales tax the state already imposes on most transactions, whether sexually explicit or not.

'Jock' tax: Some cities and states levy taxes on the income earned by athletes, entertainers (OK, not just jocks) and their various entourages, including non-athletic or non-performer employees. Generally, that means any money earned by a player or performer while playing in that particular city or state gets taxed. For instance, Cincinnati levies a 2.1 percent jock tax.

California levied the first jock tax in 1991, on athletes from Chicago, right after the Chicago Bulls beat the L.A. Lakers. (Chicago quickly responded in kind.) And today, most states with a professional sports team impose a jock tax.

Sparkler and novelties tax: In West Virginia, businesses selling sparklers and novelties are subject to a special fee. So customers in the mood for July 4 festivities may get hit with that on top of the state's 6 percent sales tax.

Playing card tax: If you want a deck of cards in the state of Alabama, be prepared to shell out an extra dime. The state government has levied a 10-cent tax on the purchase of a playing deck that contains "no more than 54 cards". If you object to this, get your playing cards in a different state, or buy a deck with an extra joker.

Blueberry tax: Like fresh, wild blueberries? If they come from Maine, you may be paying a bit of a premium due to a tax imposed on those in the blueberry business.

Anyone who grows, purchases, sells, handles or processes the fruit in the state is subject to a three-quarter-cent-per-pound tax.

Wagering tax: Speaking of cards and bets, most people know they have to pay tax on their gambling winnings. But in some places you may have to pay the price of a wagering tax, whether you gamble or not.

The wagering tax is levied in a number of states, including Pennsylvania, West Virginia, Illinois and Oklahoma. It's typically levied on casino or track owners but can get passed onto customers through the cost of casino amusements.

In Illinois, for example, the wagering tax is a gross receipts tax on riverboat casinos. And on top of that, the casinos must impose an admissions price, which is essentially a tax since it must be remitted to the city and state.

Fur clothing tax: Minnesota winters are cold, and keeping warm can cost you if you like fur.

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That's because businesses in the state must pay a 6.5 percent tax on the total amount received for the sale, shipping and finance charges associated with the purchase of fur clothing in which the fur accounts for three times more of the garment than the next most valuable material.

But a merchant can pass that tax to the customer either by including it in the price of an item (on the theory that it's part of the cost of goods sold) or as a separate item on the bill so long as the item is not represented as a sales tax.

Most types of clothing in Minnesota are sales-tax-free.

Fountain soda drink tax: This one hails from Chicago. If you buy a "fountain soda drink" think Pepsi in a cup or glass you'll pay a 9 percent tax. If you buy the same soda in a bottle or a can, you'll only pay 3 percent.

Amusement tax: Ever wondered about the extra tax you pay on stadium seats? That's the amusement tax, often levied at both city and state levels. Most states, including Massachusetts, Virginia and Maryland, and cities like New Orleans, have amusement taxes on tickets sold at any venue with more than 750 to 1,000 seats.

Amusing, isn't it?

Editor's note: This story, originally published in 2003, has been updated.  Top of page

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