Moneybox

Congress Might Actually Create a Tax Break for Gym Memberships

Women doing yoga.
We’re really going to subsidize this?
Rachel Murray/Getty Images

Sometimes Congress manages to put aside its partisan differences and rally around an idea that’s so absurd on its face that it makes you wonder if the country isn’t better off when our lawmakers are pitted in a state of tribal warfare.

Consider the PHIT Act, a piece of legislation now sweating its way through Capitol Hill that would create a tax break for gym memberships, yoga classes, athletic equipment and all manner of other “qualified sports and fitness expenses.” It would let individuals use up to $500 a year from their pretax health savings and flexible spending accounts—which were originally designed to ease the price of actual medical care—on the cost of getting in shape. The bill is expected to eat up $3.5 billion and is backed by a sprawling assortment of apparel makers, retailers, and other fitness industry players. Nike has been a particularly active lobbyist on the bill. This week, the legislation passed the House Ways and Means Committee by a vote of 28 to 7.

It is unclear whether the legislation is actually on pace to become law. But it is supported by Republicans and Democrats alike. A previous iteration had 135 cosponsors drawn from both parties in the House. In the Senate, South Dakota Republican John Thune and Connecticut Democrat Chris Murphy introduced a version during 2017.

Lawmakers behind the PHIT Act argue that it will encourage Americans to stay healthy now, which will save the government money on medical expenses later on. This is excruciatingly naive. Tax breaks like these disproportionately benefit high-income households who already make enough money to buy a gym membership (hell, you can join Planet Fitness for $10 a month if you sign up at the right time). Nobody is going to hit a treadmill because of this bill. Nobody. Taxpayers are about to subsidize a raft of SoulCycle classes for buff 25-year-old professionals because Congress needed a feel-good vote.

The big question, in my mind at least, is whether the PHIT Act will subsidize your sneaker collection, too. Given Nike’s lobbying fingerprint, you might assume that was the case. But the bill’s language is mushy, and committee staff assure me that’s not what it’s designed to do. As written, the legislation would let Americans spend pretax health savings on “membership at a fitness facility” (read: a gym), “participation or instruction in a program of physical exercise or physical activity” (read: Pilates classes), or “safety equipment for use in a program (including a self-directed program) of physical exercise or physical activity.” The bill doesn’t actually define the phrase “safety equipment,” which sounds like it could encompass everything from a pair of running shoes (I mean, gotta have proper footwear to jog, right?) to a weightlifting belt. However, a Ways and Means Committee spokesman told me that it was meant to cover things such as cycling or baseball helmets while excluding footwear and apparel, and that Congress expected regulatory agencies to define “safety equipment” more precisely down the line.

But set the shoes aside for now. The bill will still offer discounts on all manner of bougie fitness pursuits. Here’s the array of stuff PHIT America, a corporate-backed nonprofit that’s been pushing this legislation, thinks will be fair game for a tax break:

List of activities eligible for PHIT reimbursement.
PHIT America

We’re talking about a bill that’s going to cut the cost of my Equinox membership. It’s a regressive and pointless crime against public policy. As the Tax Policy Center’s Leonard Berman tweeted:

But the bill is more than just joke fodder. It’s also symptomatic of a long-standing sickness in American policy making: American politicians, including Democrats, are absolutely addicted to hiding pieces of the welfare state inside the tax code, rather than just spending directly on public goods and services. We deal with retirement savings through 401(k) accounts and health care with FSAs and HSAs and education through 529 accounts and offer commuter benefits and on and on. As a result, positive public policy goals—like helping Americans get fit—get channeled toward silly giveaways for wealthy corporations and upper-income families that don’t really achieve what they intend, because they’re not targeted well toward the people who need help. The fact that these ineffectual ideas are some of the only things that can still get bipartisan support is just one more sign of how broken our politics actually are.