A Georgia state senator said that he is thinking of imposing fees on strip club patrons supposedly to help fund programs for victims of sexual abuse. Surely the reality is more moral than charitable.

The legislation, proposed by Senator Jack Murphy, would charge between $3 and $5 per visitor at every strip club in Georgia. Murphy says he would forward the additional revenue to therapeutic programs for victims of child prostitution and other forms of sex-related abuse because the state has cut funding for a lot of such services to compensate for statewide falling revenues.

Although Lt. Gov. Casey Cagle, who presides over the state senate, says he is reluctant to add such a fee because this is not the time for raising taxes.

Many in opposition to the proposed legislation argue that a fee would not only make a difference, but also put many of these strip clubs out of business.

You’re not just putting a tax on the patrons of the adult clubs, said Aubrey Villines, a lawyer who has represented strip-club-owner Jack Galardi. What does it do to the waitresses, to the food workers, to the parking attendants? The people who all depend on this industry for work?

A similar strip-club fee of $5 per patron was instated in Texas in January 2008. In this case, a state district judge ruled in March that the fee was unconstitutional in that it violated the First Amendment.

Murphy says he will announce his final decision after consulting legislative leadership.

State Representative Mark Miloscia has propose to levy an 18.5% Washington State tax on all visual or audio pornographic materials.

Several other Democrats have also signed on to the bill, including House Majority Leader Lynn Kessler.

Under the bill, revenue collected on sales and use of adult entertainment materials and services would be used to help fund the General Assistance-Unemployable, a safety net program.

The tax would be levied on magazines, photographs, movies, videos, cable television services, telephone services, audiotapes, computer programs and paraphernalia that market porn.

For me it is a no brainier, Miloscia said: People say this will cause business to go out of state; who is going to care about that?

He said the bill was inspired by California, which he said has a 25 percent adult entertainment tax. He said the tax generated almost $250 million for the state last year.

Miloscia said his bill will likely be heard by the House Finance Committee in the coming days.

In light of a $15 billion state budget deficit, New York Governor, David Paterson, has proposed an additional 4% tax on all digitally delivered entertainment services, including online adult content.

Following the proposition, the iPod tax was immediately met with criticism from not only the adult entertainment industry, which has largely dismissed the tax as a publicity stunt, but also from the conservatives, who fear that such a tax would legitimize the downloading and viewing of adult content.

You're sending a message to children, and you're sending a message to teenagers: If you're taxing it, how can it be wrong? said state Conservative Party Chairman Michael Long.

Paterson's proposed tax is the most recent of a seemingly popular trend in that it follows similar propositions in California and more recently, Washington.

Update: Unconstitutional

18th February 2009. See article from avnmag.avn.com

At least one constitutional scholar questions the legality of such a tax.

If the tax were limited to [MP3, porn and other entertainment downloads], there would be some substantial problems, said attorney Reed Lee, an expert in constitutional law: If it's an attempt to tax all Internet traffic, whether that be downloading the latest NASA pictures from Mars for scientific purposes or what, as well as entertainment downloads, then that has a much better chance of passing constitutional muster. In general, a tax designed to impose a burden on specific expression will face the most serious constitutional obstacles in court.

Lee cited two late-'80s cases involving the Minneapolis Star Tribune newspaper and the Arkansas Writers Project. In the Minneapolis case, the government tried to place a sales tax on newsprint - and failed.

A government can impose a sales tax on newspapers and magazines, so long as it also imposes a sales tax on everything else, Lee explained. But a sales tax on only newspapers and magazines might pose a serious constitutional problem. And one imposed only on Playboy and Penthouse would face virtually insurmountable problems.

Update: Wisconsin

20th February 2009. See article from theregister.co.uk

Wisconsin has followed in the footsteps of New York State by passing a stimulus bill that includes a measure for adding sales tax to digital downloads starting October 1. The bill also includes budget cuts as well as a variety of tax increases to patch Wisconsin's $600m shortfall under its current budget set to expire June 30.

But the bill is getting a lot of media play for its digital tax provisions, fingered as (the arguably misleading moniker of) an "iPod tax." The name obviously downplays the true reach of the tax, which levies a 4 per cent charge on "digitally delivered entertainment services" including music, movies, e-books, greeting cards, ringtones, and many other downloadable items. It's expected to generate $11m for the state over two years.

Update: Wisconsin downloads new tax

21st February 2009. See article from business.avn.com

Wisconsin state legislature has now approved a 5% tax on Internet downloads to take effect in October.

Backed by Governor Jim Doyle, the tax will apply to music, movies, downloads, games, ringtones, e-books, greeting cards and other items, according to the Associated Press. This would presumably include adult content.

Update: Stimulus ends need for Download tax

12th March 2009. See article from gamepolitics.com

Gamers who live in the state of New York are already experiencing a benefit from President Obama's recently-passed stimulus package.

CNN reports that New York has scrapped a plan to tax digital downloads such as iTunes music and video games.

Instead, Gov. David Paterson and New York legislators will utilize $1.3 billion in stimulus money to help balance the state budget.

Representative Mark Miloscia gave it his best shot, but his proposal to tax adult entertainment products and services to fund unemployment and welfare benefits is dead - mainly because it's too complicated.

According to the Seattle Post-Intelligencer, Rep. Ross Hunter , chair of the state House Finance Committee, had originally said he'd give a hearing to House Bill 2103,  but thought better of it after remembering that the state had previously signed onto the 2002 Streamline Sales and Use Tax Agreement, whose fundamental purpose is to simplify and modernize sales and use tax administration in the member states in order to substantially reduce the burden of tax compliance.

Miloscia's porn tax bill, it seems, in attempting to put a tax on goods based on their content, wouldn't fly under the simplification agreement - and besides, a tax based on content is just unconstitutional.

State Assemblyman Alberto Torrico has introduced a bill that would place a tax on adult entertainment products sold in California.

The tax percentage was not written into the bill introduced Friday; however, Torrico spokesman Jeff Barbosa told XBIZ that the bill is still in the beginning process” and that legislative analysts will provide a tax amount shortly.

The timing of Torrico’s proposal comes on the heels of dwindling state coffers, as well as the assemblyman’s push to provide a domestic abuser surveillance fund to track abusers and stalkers.

The bill’s language, as it stands, only includes a proposed tax on the sale of harmful matter goods at the retail level.

Brooklyn Assemblyman Felix Ortiz introduced a bill that would require gentlemen's club patrons to pay the state $10 every time they visit.

Ortiz said the fee could raise as much as $500 million, which would be earmarked for victims of human trafficking, domestic violence, sexual abuse and child prostitution.

We have to protect people who have been victimized by unscrupulous individuals, and we cannot continue, especially in this economy, to have government pay for everything, Ortiz said.

Ottiz' bill has yet to find a sponsor in the state senate.

Texas State is holding $11.2 million in fees collected from strip club patrons pending the action of an appeals court.

A $5 fee for strip club patrons was passed into law in 2007, with the money collected to fund sexual assault services in 54 Texas counties and health insurance programs. Last year, a judge struck down the law, saying that topless dancing was protected as free speech and that the state couldn't show a link between strip clubs and inadequate health insurance. The state has appealed, and the appeals court has not yet ruled.

Though the Texas Comptroller's Office continues to collect the fee, only some topless clubs are paying it. Some clubs have argued that collecting the money while the bill is under consideration in court is unfair and affects their cash flow as the economy slows. The $11.2 million collected is lower than the $40 million that legislative analysts projected in the law's first year.

Representative Ellen Cohen, who authored the original 2007 bill, is pushing a new version this year, which drops the charge to $3 and sends all proceeds to sexual assault programs. Lawyers for the clubs say they'll take it to court if it passes.

We will continue to fight until they stop filing unconstitutional legislation, said Stewart Whitehead, an attorney for the Texas Entertainment Association, which represents topless clubs in Texas: These changes don't get them around the fact that they are taxing constitutionally protected speech.

Florida legislators are looking at next year's budget and trying to figure out how to balance it — and one of the answers they're coming up with is to do it partly on the back of the state's adult industry.

According to an article on MSNBC.com, two (unnamed) state legislators have argued that new taxes on sex businesses should be considered, encompassing every facet of adult products from sexually oriented websites to the novelties and lingerie sold at boutiques, to DVDs and magazines sold at adult book- and video stores. And they haven't forgotten door fees at adult nightclubs, either.

No such content-based taxes have successfully been enacted except for a $5 adult club entry surcharge in Texas, and even those proceeds are being escrowed as Texas club owners continue to fight that pole tax. Similar attempts in Washington state, New York and California have been defeated.

It's a vast untapped source of revenue in Florida — one that could be as reliable as taxes on drinking and smoking, MSNBC's reporter wrote, recognizing however that: One barrier to such a tax is that opponents would try to overturn it on grounds it could violate free speech rights.

Nevada senator Bob Coffin has proposed a $5 tax on every prostitution transaction that occurs in the state, according to a Las Vegas Sun report. Coffin says the tax would raise an additional $2 million a year for Nevada, and a lobbyist for the legal brothel industry supports the idea.

I think we will support [the tax], said George Flint, director of the Nevada Brothel Owners Association. There are 28 legal brothels operating in Nevada, along with illegal unlicensed prostitution, and prostitution is actually illegal in the city of Las Vegas. Coffin's proposed tax would apply to both legal and illegal prostitution.

The proposed tax would be paid by customers, not levied from the prostitutes' wages.

Texas legislators have given a green light for a new tax on sexually oriented businesses that would replace a measure that taxes patrons entering strip clubs.

Under H.B. 982, a $5-per-person gentlemen's club fee would be repealed and replaced with a 10% tax to those sexually oriented businesses that charge an admission fee.

The bill, introduced by Representative Senfronia Thompson and endorsed by the adult entertainment industry, passed the House on Thursday.

This bill is unlike the $5 admission tax that has been tied up in the courts since the last legislative session, Thompson told XBIZ: The free-speech issue that has dogged that one has been eliminated with this bill. We are charging a tax, in this case, to do business in the state of Texas.

Thompson noted the proposed tax does not target nude dancing, a form of expression a Texas court ruled is protected by the First Amendment.

She said that the bill was hammered out with the help of members of the Texas Entertainment Association, which is an industry trade association for Texas strip-club owners. She noted that there are 115 known strip clubs in the state.

The bill's target is strip clubs, but it could be expanded to other sectors. H.B. 982 defines sexually oriented businesses to include any commercial enterprise selling, renting or exhibiting items [and services] intended to provide sexual stimulation or sexual gratification to the customer.

Strip owners who have paid the state under the old fee would get a credit toward the new tax, which would go into effect as early as July 1. Thompson said that the bill has moved on to a fast track in the Legislature and could be signed into law by the governor within weeks.

A proposal to levy a $5 tax on sex acts in Nevada has died in a state Senate committee.

The 3-4 vote Thursday in the Nevada Senate Taxation Committee was one shy of the four needed to keep the proposal afloat.

Committee Chairman Bob Coffin, the Las Vegas Democrat who sponsored the bill, says the state is desperate for revenue and has not collected taxes from prostitution since it was legalized in some rural counties more than 30 years ago.

The measure that would create a 12% excise tax on all tangible adult entertainment products in California has been dropped for the legislative season but still is alive.

Assembly Bill 1082 is slated as a two-year bill and will be brought back in August when the Legislature reconvenes after summer recess, according to Allegra Kim, a legislative analyst for state Assemblyman Alberto Torrico who sponsored the measure.

But for the time being, Free Speech Coalition Executive Director Diane Duke is elated: We’re thrilled. We dodged another one, but there always are those who believe in the absurdity of a bill like this one. I think there always will be those who want to abridge the industry’s free-speech rights.

FSC was joined by the American Civil Liberties Union, which said that the U.S. Supreme Court has made it clear that a tax on First Amendment protected speech will not withstand constitutional scrutiny and that the tax imposed by this bill is an unconstitutional, content-based regulation on speech that impermissibly burdens vast amounts of protected expression.

A Texas Court of Appeals panel has upheld a lower court ruling striking down a tax that imposed a $5 tariff for each customer entering a sexually oriented business (SOB).

On appeal, Texas Comptroller Susan Combs argued that the SOB tax does not violate the 1st Amendment nor the Texas Constitution, that sovereign immunity bars suit by the Texas Entertainment Association and that the trial court erred in awarding attorneys fees.

But the appeals court judges had concern over a tax that was a content-based speech regulation and subjected to the strict scrutiny required to determine if the regulation were narrowly tailored to serve a compelling governmental interest.

Evidence that the SOB tax is aimed at reducing secondary effects of sexually oriented businesses does not preclude the proper application of strict scrutiny in this case, the court ruled.

In addition, the court overruled the sovereign immunity and attorneys fees claims by the Texas comptroller.

At post time, it wasn’t clear whether the comptroller will appeal the decision to the Texas Supreme Court.

A California bill that would impose a 20% tax on sales of adult movies and sex toys, as well as the receipts of strip clubs, has been introduced in the Legislature.

California Assemblywoman Mary Salas introduced the proposal, which would send revenue from the tax to a newly created Adult Venue Impact Fund.

The fund would then be distributed to local law enforcement agencies in an effort to deal with supposed secondary effects that are associated with adult entertainment businesses.

Free Speech Coalition lobbyist Ignacio Hernandez said the bill could be found unconstitutional on several points, including taxation based on the content of a movie: This measure is clearly unconstitutional and unworkable. This bill is much broader than previous efforts to tax adult movie and novelty retailers. Therefore, it suffers from greater constitutional defects than prior bills.

Hernandez said the broad definition of harmful material included in the bill’s language would likely be opposed by entertainment organizations like the Motion Picture Association of America.

Specifically, Assembly Bill 847 would levy a 20% on the gross receipts of any California business that is:

• A retail establishment whose gross receipts from the sale or rental of adult material exceeds 50% of all gross receipts.
• Providing a public or private viewing of adult material.
• An establishment that offers live sexually explicit conduct that is prohibited to audiences under 18 years of age or 21 years of age, depending on whether alcoholic beverages are sold on the premises.

A hearing on the latest proposed porn tax bill is scheduled for next month.

A California bill that would have imposed a 20% tax on sales of adult movies and sex toys, as well as the receipts of strip clubs, has been voted down by a legislative panel. The bill was voted down in the Assembly Tax and Revenue Committee.

California Assemblywoman Mary Salas, D-San Diego, sponsored the proposal, which would have sent revenue from the tax to a newly created Adult Venue Impact Fund.

The fund would then have been distributed to local law enforcement agencies in an effort to deal with secondary effects that are supposedly associated with adult entertainment businesses.

Salas’ chief of staff, Francisco Estrada, told XBIZ that the assemblywoman was deeply disappointed by the 5-4 vote against the bill: At this point, we’re not sure if the bill will be resurrected.

The Utah Supreme Court has ruled that a state tax on strip clubs is constitutional but that the same tax on escort services is not.

Passed in 2004, the tax levies a statewide 10% tax on admission and user fees charged by sexually-explicit businesses, defined as any business where a nude or partially denuded employee or contractor performs any service. Utah-produced merchandise, food and drinks sold by these businesses also are subject to the tax.

The statute also levies a tax on escort services, which are defined as any person who furnishes or arranges for an escort who is compensated to accompany another individual for companionship. An escort is any individual who is available to the public for the purpose of accompanying another individual for compensated companionship.

Associate Chief Justice Matthew B. Durrant said that the state's Sexually Explicit Business and Escort Service Tax is content-neutral when applied to nudity.

In this case, application of the tax is triggered by nudity, which the Supreme Court has specifically declared 'is not an inherently expressive condition, Durrant wrote. Because it is not inherently expressive, nudity is unprotected conduct rather than protected expression.

Regarding the taxing of escort services, Durrant found that the language was fatally overbroad, but opened the door to a legislative revision that included more specific language. Nowhere does the statute define an escort in terms of nudity, he wrote. The statute also fails to define the term 'companionship.' Therefore, according to the plain terms of the statute, individuals who are paid for providing care for the elderly as well as those who are paid as tour guides would fall within the definition of an 'escort,' and any person or business who employs them would be subject to the tax.

The Texas Supreme Court has decided to review the legality of charging a $5-per-person pole tax to patrons of strip clubs and other adult entertainment venues, a case that has hinged on whether the government can tax content protected by the First Amendment.

The law, passed in the 2007 legislative session, originally directed revenues collected from the fee toward sexual abuse and violence treatment and prevention programs, but it has been mired in legal wrangling almost since it took effect in 2008.

I'm extremely happy that they agreed to hear the case, said State Rep. Ellen Cohen, who sponsored the legislation and filed an amicus brief urging the court to review the matter. If you're going to do this, you need to raise a substantial enough amount of money to make a dramatic effect on issues surrounding sexual violence. The way we fashioned it was absolutely the correct way and the most reasoned way.

The law was struck down in March 2008, by a Travis County District Court judge, a ruling that was upheld in June by the Austin-based 3rd Court of Appeals. The state has collected more than $12 million in fees that have been held in escrow pending the final outcome of the case.

David A. Furlow, a former Harris County prosecutor who has represented businesses in numerous cases involving First Amendment protections, said the central issue is whether the government can levy a tax on speech, such as a newspaper or TV show or dancing in a strip club, that has the effect of singling it out.

When you say certain types of messages and certain types of entertainment can be taxed, you begin down a slippery slope that can allow the government to destroy a form of business by taxing it out of existence, he said. You start down a pathway that could lead to censorship-based government like that which exists in Iran.

To defend the law, the government has been forced to argue that strip clubs lead to greater violence against women, a claim for which there is no evidence, Furlow said. Under such logic, he added, R-rated movies could be taxed because of the violence sometimes depicted in them.