The yoga tax is good karma

On Saturdays at 11 a.m., a friend and I attend a yoga class at a Tribeca studio beloved by the so-called Goldman wives, the trim, Lululemon-clad women married to the financiers who inhabit the neighborhood’s cast-iron lofts. After class, we poke a little fun at the crowd, then look down at our feet and admit that we, too, are part of the problem. We’re not remotely 1 percenters, but we’re educated and fortunate enough to have full-time employment, and we can afford to spend $15 each week to attend a 95-minute yoga class. What’s more, we don’t have to pay taxes on our yoga class, or any other yoga class in New York City.

Should we? While efforts to tax these classes were struck down in New York, in Washington, D.C., the City Council recently passed legislation that will tax yoga, among other services, at the local sales tax rate of 5.75 percent.

Yogis in the nation’s capital were predictably outraged (and characteristically sanctimonious), complaining to news outlets that they don’t want to pay taxes for having a healthy lifestyle. But yoga studios and health clubs weren’t quite singled out. The City Council sought to tax dozens of services, including car washes and bowling alleys, in an effort to bring in more sales tax revenue and cut income taxes for low- and middle-income households. The District’s move to tax more services was also part of a larger overhaul designed to offset income tax cuts and shift some of the tax burden onto commuters from nearby Maryland and Virginia.

The move makes economic sense: Over the past 50 years, services have come to make up a larger and larger part of the U.S. economy — 66 percent in 2013, compared with 47 percent in 1960 — and the tax code evolves according to shifts such as this one. What’s more, paying an extra few dollars on a yoga class or gym membership might very well be financially onerous, but there are convincing economic, social and even spiritual arguments in favor of it — particularly because for many, these services are more of a luxury than a necessity. 

In the past, critics of taxing services argued that it would amount to an additional income tax on the person providing the services. This would force yoga instructors and hairdressers either to swallow the cost themselves or to pass it along to the consumer, thereby contributing to reduced demand, notes Brian Galle, a tax law professor at Boston College.

The line between what constitutes a “good” and what counts as a “service” is often up for (mindless) debate, Galle told me. “It’s kind of stupid that there is an entire body of case law about, say, when you buy stuff from a florist, are you buying goods or services?” Galle said. “You’re buying flowers, but they put them together in an artful way. Who cares? Why are we wasting time debating this?”

Political factors can play a significant role in what ultimately escapes a levy when services are taxed. Of the services the D.C. Tax Revision Commission recommended be taxed, two were removed by the City Council. The first was barbershops and beauty parlors, something Kim Reuben, a senior fellow at the Urban Institute and a member of the D.C. Tax Revision Commission, said has “everything to do with the historical significance they have within black communities.” The second were expensive cigars, which are subject to a regular sales tax, rather than the 80 percent rate on other tobacco products. “There’s a certain amount of power in high-end cigar shops,” Reuben notes.

To lawmakers and many taxpayers, the cultural value of a group of white ladies in crow pose can seem tenuous. Still, in New York City, yoga studios successfully lobbied for a carve-out in a 2012 law that taxes health and fitness clubs, saunas and “weight control salons” (whatever the hell those are). State legislators were swayed by their argument that yoga’s spiritual and meditative components set it apart from more straightforward exercise. As Alison West, a longtime teacher who led the opposition (full disclosure: I trained as a yoga teacher with her) points out, her classes typically include at least a few minutes of nontaxable activities such as chanting. “It’s meditation, it’s pranayama [breathing exercises], it’s everything that is not to do with what everyone thinks of as the fitness part,” she said. “How do you calculate how much of it is taxable?”

West added that classes in New York were already prohibitively expensive for some of her students. A single class in a major city typically costs between $15 and $25, and West believes that adding an extra $1 in tax could render classes even less accessible.

That speaks to the notion that yoga classes, and “wellness” in general, are luxuries, not necessities. Demographic data from Yoga Journal paints a picture of a yoga community that is decidedly affluent: The magazine’s media kit says its 2 million readers have a median household income of $68,000. Fifty percent of its readership has household income of $100,000 or more, nearly twice as much as the national median of just over $51,000. This echoes much of what we know about the correlation between health and wealth.

Of course, the group of people who practice yoga extends well beyond the readership of Yoga Journal (to, say, India), but in the U.S., at least, the image of the “om”-ing Goldman wife is not simply a mirage.

The Washington tax is a done deal. So what options does that leave for D.C. yogis for whom the 5.75 percent tax will put the cost of classes just beyond their reach? Practicing yoga at home, with a DVD or through classes teachers make available for free on their personal websites, is one possibility. Studios could also add more donation-based classes and expand karma yoga programs, in which students offer their services in, say, marketing or Web design, or work a few hours per week in the studio, in exchange for classes. One would hope that the local yoga community, so unified when fighting taxes, would come together to support such efforts.

What’s more, changes to D.C.’s overall tax code could end up helping middle-class yogis and non-yogis alike, notes Reuben (who switched from yoga to Pilates for health reasons): Tax cuts for middle-income households making over $60,000 will yield an average of $300 per household in savings.

Classic yogic texts such as B.K.S. Iyengar’s “Light on Yoga” teach that yoga’s goal is union, transcending the individual ego and realizing one’s unity with the divine and with the rest of the universe. For those who with the means, paying taxes on a yoga class — money that goes to pay for communal goods like roads, schools and salaries for government workers who perform essential services — could be seen as bringing yoga practitioners one step closer to union, even before class has begun.