RENO, Nev. (MyNews4.com & KRNV) — The Nevada Supreme Court has decided a 10 percent tax on strip club admission doesn’t violate exotic dancers’ first amendment rights of free expression.
Justices ruled it was constitutional to tax the clubs and other live entertainment because the tax is content-neutral, doesn’t target a small group of people, and doesn’t threaten to suppress ideas or viewpoints.
The broad-based tax applies to many events but exempts some live entertainment, including boxing, Nascar races and minor league baseball.
Strippers Argue Free Speech In Court, Don’t Stay In Vegas
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The Nevada Supreme Court will decide whether Vegas strip clubs must pay a 10% entertainment tax imposed by state law. The tax covers fees, food and drinks. Although the clubs have been forced to pay it since 2003, they claim it’s unconstitutional and want a refund.
Why? Exotic dancers have First Amendment rights, the clubs say. This tax violates the Constitution. Sound crazy? It depends.
Lawyers for eight strip clubs say the tax violates the right to free speech. But the Nevada Department of Taxation sees the tax as just another excise tax on business transactions. An excise tax is like a sales tax only more targeted. Some people call these sin taxes, and that’s a name that seems apt here.
Several courts have heard the case since 2006. But in case after case, Nevada’s tax has been upheld so far. Now Nevada’s highest court will take a look. Most observers think the tax will be upheld.
In fact, in other states taxes on similar activity have generally passed constitutional muster. In New York, court battles brewed for years over a sales tax exemption that was applied to artistic performances like ballet but not to so-called exotic dance. The question was whether lap dances could be classified as “art” and therefore be tax-exempt.
A key suit was filed by a New York club called Nite Moves. An adult juice bar, the club serves no alcohol but does serve lap dances. The club claimed lap dances were art so were tax-exempt, but the club consistently lost. See 677 New Loudon Corp., dba Nite Moves v. New York Tax Appeals Tribunal.
The club’s revenue comes from admission charges, sales of non-alcoholic beverages, and exotic dances. New York is collecting sales tax on the dances. The club relied on an exemption for musical performances.
Some argued only choreographed dances count, while lap dances are more extemporaneous. After losing in New York’s highest court, Nite Moves fired off a petition asking the U.S. Supreme Court to hear its appeal. That petition was rejected by SCOTUS.
Texas also has a Sexually Oriented Business Fee, generally referred to as a pole tax. It collects $5 from each patron of clubs featuring nudity and serving alcohol. There have been court battles over this tax too, but the Texas Supreme Court eventually upheld it. Dancing may be a way of expressing yourself, but the pole tax doesn’t violate the First Amendment, the court ruled.
Even Illinois now has a pole tax. Getting any tax ruled as unconstitutional is tough. And while the specific language and effect of any tax must be examined, the likelihood of the free speech argument carrying the day seems small.
You can reach me at Wood@WoodLLP.com. This discussion is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.
9th Circuit to strip-club dancers: Keep your distance
Friday, January 28, 2005
LA HABRA, Calif. — A federal appeals court has upheld La Habra’s ordinance requiring strip-club dancers to stay at least 24 inches from customers.
The ordinance was designed to target lap dancing, which the city claims is responsible for prostitution, crime, drug use and disease.
In a 3-0 ruling on Jan.26, the 9th U.S. Circuit Court of Appeals rejected arguments by Bill Badi Gammoh, owner of the city’s only adult-entertainment club, and by several lap dancers that the ordinance is unconstitutional.
The 2-foot limit does not deny the dancers their ability to perform, the judges said in Gammoh v. City of La Habra.
Attorney Deborah Fox, who represented the city in its fight with the owner of Taboo Gentleman’s Club, said it was an important ruling because “lap dancing is the financial linchpin of the adult industry and this is the end of the argument about its prohibition.”
Gammoh’s fight with the city began shortly after he opened the strip club in 1998 and filed a lawsuit challenging the city’s anti-lap dance ordinance as vague and unconstitutional.
The ordinance “unfairly impedes on (a dancer’s) right to expression and speech,” attorney Scott Wellman said.
The 9th Circuit disagreed. “The 2-foot rule,” Judge Richard Tallman wrote, “merely requires that dancers give their performances from a slight distance; it does not prohibit them from giving their performances altogether.”
Meanwhile, a Nevada judge ruled on Jan. 21 that a Las Vegas law prohibiting strippers from fondling customers during lap dances is unconstitutionally vague.
District Court Judge Sally Loehrer affirmed a lower court ruling that as many as five misdemeanor criminal cases filed against Las Vegas strippers should be dismissed.
The Jan. 21 ruling affects only dancers within city limits. The Clark County Commission in 2002 limited touching between strippers and patrons during private lap dances, specifically barring strippers from touching or sitting on the customer’s genital area. But the municipal code was not as specific, saying only that strippers and their patrons should not “fondle” or “caress” each other.
Under Loehrer’s ruling, no dancer in the city can be arrested for violating the municipal code. The city is considering an appeal.