Taxing Strip Clubs: OK; Taxing Escort Services: No

Somehow, strip clubs and taxes seem to follow each other. Usually I report on strip club owners who somehow forget that cash income is just as taxable as any other income. Today, however, it’s time to head to Utah and look at the application of taxes on strip clubs and escort services.

Back in 2004 the Utah legislature voted to impose a 10% tax on strip clubs and escort services; the tax would fund sex offender treatment for some incarcerated sex offenders and fund the Utah Attorney General’s task force looking at crimes against children. The tax is imposed on businesses where there’s nudity for more than 30 days, and impact admissions, user fees, food and beverages, and Utah-produced merchandise that is sold in the businesses.

The tax was upheld on the strip clubs:

In this case, the tax is triggered by nudity, which the (U.S.) Supreme Court has specifically declared ‘is not an inherently expressive condition. We find nothing in the record before us — either (in) the tax’s legislative history or in the text of the tax itself — establishing that the tax was enacted with the predominant purpose of suppressing protected expression.

However, the tax was ruled unconstitutional as far as escort services. The statute doesn’t relate escort to nudity, and so it was ruled too broad:

The tax defines an ‘escort’ as anyone who accompanies another for compensated 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.

So good news for escort services, for now, but bad news for strip clubs. Unless the nudity vanishes—and that would, one assumes, defeat the purpose—Utah’s strip club tax is constitutional.

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