Texas Upholds $5-Per-Patron Strip Club Tax to Combat ‘Social Ills Associated With This Type of Business’

May 13, 2014 in News by The Manimal

Source: Reason

The Texas Third Court of Appeals has upheld a punitive $5 tax levied on anyone who patronizes a strip club in Texas. Because Texas strip clubs stopped collecting the fee while it faced legal challenges (and some never started), they now face millions of dollars in retroactive payments owed to the state.

The Texas Entertainment Association (TEA), a strip club industry group, has been fighting the fee—long referred to as the “pole tax”—since it became state law in 2007. After losing a Texas Supreme Court challenge to the fee on First Amendment grounds, the TEA alleged in this case that the state “sexually oriented business fee” violated state free speech protections; unfairly targeted strip clubs but not other forms of adult entertainment; and qualified as an occupation tax so was thereby subject to the state’s occupation tax revenue rules.

But the appeals court rejected all three arguments, ruling that the fee was not an occupation tax, a violation of free speech, or an unfair assault on live nude entertainment specifically. The fee “does not relate to the privilege of operating a nude entertainment business in Texas—it relates only to whether the business provides live nude entertainment while allowing alcohol consumption,” the court wrote in its decision. (And if alcohol sales account for a big part of nude entertainment business profits? Too bad.)

The court went on to explicitly cite the alleged “secondary effects” and “social harms” brought by adult entertainment venues as a justification for the fee. Funds extorted from strip clubs and their patrons will go to pay for programs for sexual assault victims, under the nonsensical theory that the mere existence of strip clubs drives up rape. Nevermind that there’s not a bit of evidence that strip club patrons or employees are either more likely to commit or more likely be the victims of sexual assault than folks in the general population.

Just in case there was any doubt in anyone’s mind about the purpose of this tax on strip clubs, the Third Court of Appeals lays it out nice and clear: “The primary purpose of the sexually-oriented-business tax is not to tax these businesses for the privilege of providing nude entertainment in the presence of alcohol consumption,” the court wrote. “Rather, the tax’s primary purpose is to discourage this type of business activity altogether while also generating revenue to ameliorate the type of social ills that are associated with this type of business.”