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

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.”