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Adult Entertainment and It's Effect on Society

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Adult Entertainment:
The Effect it has on Local Politics, Taxes, & Society
Lindsey M. Chapman
BUS 670: Legal Environment
Professor Kim Stock-Foster
May 21, 2012

While planning the development and growth of any city, most government officials do not keep the idea of adult entertainment type businesses at the top of their list or in the front of their minds; however almost any and every city of any size will have to encounter this type of business at some point in time. Adult entertainment type businesses come with their own type of issues when it comes to tax laws, business permits, and so forth, but in the past these types of businesses have been able to utilize their First Amendment Rights to defend their style of business, but when these types of businesses are utilizing local tax money to protect and defend their businesses when is enough, enough? It is well known that many people will turn to adult entertainment, not only for entertainment but for work for the simple fact of making a significant amount of money in a very short time; however what kind of impact do these types of businesses have on local governments and societies when the majority of the employees do not pay any taxes on their income? The following paper will describe the effects that adult entertainment businesses have on local governments, the tax laws, and the effects these taxes have on the society of the environment the business is in. Throughout history there have been many different types of entertainment for the masses. In recent years the idea of adult entertainment has shifted form to a style that is all in its own. With this new style of entertainment has come a high amount of changes that have had to be made by local government officials for the ethical and moral sake of the town they govern. Studies have shown that this type of entertainment has created its own type of crime around it, with more crime comes the need for more police and more legality to be set forth to try to keep crime to a minimum. “Civic leaders and urban governments have tried to control adult entertainment activities with a variety of 'command-and-control' techniques, including vice laws, licensing, zoning and land use planning powers. However, despite persistent efforts, they have failed to eliminate such activities. Recently, civic authorities appear to have had some success in closing down or down-sizing adult entertainment districts in many cities, but this success is more apparent than real” (Ryder, 2004). With that said however, where is the money coming from to have the extra law enforcement officer to enforce the laws, the engineers to re-route the zoning, the construction workers for the zoning, and so forth? This is paid for through the host city and the tax money that the residents of the city pay annually whether it is property tax, sales tax, or taxes that businesses pay to the city to be open. So this should be a problem that in a way takes care of itself if a business pays its taxes then the work is paid for through the city to allow such changes to take place. Then again, what if a business has found a way around participating in paying most of the taxes required by the municipality that the business is located?
As with most adult entertainment businesses, the majority of employees that work within the business do not pay any taxes on the income they take in. I, for example, do work in a gentleman’s club as a bartender and manager. I am paid a very small hourly wage, about four dollars below minimum wage due to the fact that I have the opportunity to make tips. I take home approximately $3,000 per month but only pay federal taxes on what my actual paychecks add up to be, which is about $500 per month. Now, I could keep record of what I make nightly and still report it to the IRS and the local tax office; however I consider myself a starving student who eat Ramen noodles too frequently so I do not. I am not the only one either. The entertainers that I work with do not make any sort of wage and only take home what they make in tips, which I have seen some take home over $1,000 in a five hour work period. They do indeed work very hard, despite my unrest about their dishonest money. Along with that comes, the youth that show up at the business because they have dollar bill signs in their eyes. My business had an entertainer that began working before she was even out of high school. Why? Her mother worked there as well. They had always been a poor family and never thought of doing anything better with their lives. One prominent cultural researcher noted that, “I did see the movie Dreamgirls with a friend who is African American and who grew up in the segregated South. Throughout the movie, I was intrigued by how differently we reacted to the various scenes and messages. For example, I had never heard of the chitlin circuit. But, for her, an avid music fan, the chitlin circuit was common knowledge. Then we shared our perspectives and interpretations afterward, I had an opportunity to hear about a part of her that is often hidden from those in my predominantly white, middle-class world” (Thompson, 2007). So since I am from an honest, hardworking middle class family, should I act differently in this type of business? I probably should, but I do not. I work hard for the money I make and eventually I will go further into a more honest living.
Back to the subject of income, our bosses, as with 99% of other club owners across the country, do not require the employees to report any income to them, so they do not have to report any income to the local tax and IRS office. Why, though? “If clubs had to pay dancers wages and benefits, they would be required by law to keep track of their tips” (Vogul, 2008). It is also due to these businesses being bogged down by local municipalities so they have started finding ways around the legislation that has set out to either straighten the businesses up or run them out of town? But is that an invasion of any sort of amendment? Supporters of adult entertainment have long used the First Amendment to assist in fighting their legal battles; some battles have even gone beyond small cities to be heard by the Supreme Court. With the Supreme Court getting involved, does this invade the rights of the states to set forth their own legislature on items such as adult entertainment? Nevada, for example, would want to write its own legislature which would differ greatly from a state like West Virginia. “When called upon to evaluate adult-use zoning ordinances, the Supreme Court must address a clear conflict between free speech values and the social and economic life of a community” (Smith, 1991). The Supreme Court can only do so much without invading the right of the states. The biggest difference in utilizing the First Amendment for protection is only that it protects freedom of speech, and nowhere near touches on the issue of taxation. But can the lines be blurred at all?
A case that appeared in front of the Supreme Court, “revealed a tension between land use and free speech values that has continued to appear in a developing line of first amendment cases. On one hand, zoning adult uses restricts speech because it limits the distribution of books and movies that are protected by the first amendment. On the other hand, failing to regulate such enterprises may endanger the economic and social vitality of the community” (Smith, 1991). So the issue of zoning can greatly affect tax payers but the First Amendment has nothing to do with the tax subject. How is this line being swayed for the adult entertainment businesses? There is always the ideal of corruption in local governments, but at the same time not every local government official in every town could be corrupt.
These types of businesses make money, lots of money. These types of business draw large and a social crock pot of society’s members. So if these businesses cannot be shut down because they are for some odd reasons severely popular, then governments have started finding ways to make sure that tax dollars will be paid some way or another. “Municipalities have enacted, in addition to fees and taxes, zoning ordinances that impose location and distance restrictions on adult businesses” (Carr & Griffith, 2007). By making it so these businesses have to be in a certain part of town, maybe an area where property tax may be higher or property values are very high, governments have started finding loopholes in getting these businesses under the government’s control. In the town where I work, there is only about a one half mile strip of land on a not so busy street where an adult focused business can open, and within that one half mile strip there are over four adult entertainment businesses squished together. This strip is away from housing subdivisions and is also about ten miles from the closest school; all due to the city’s zoning laws for adult business. In these specific areas where adult businesses can operate, the taxes are just a bit higher. This of course only due to the government stating the land is more valuable. Other cities, even in other states, are doing the same with zoning regulations, but also making additional regulations that can put more money back into the city’s tax fund.
“Starting in January, Shelby County began enforcing stricter adult-oriented business laws, including an annual $500 business permit, and $100 work permit for employees, background checks, a ban on beer and alcohol, no touching and all dancers must cover their private parts” (Anthony, 2012). With those sort of rules put forth for adult businesses, does that lessen their impact on society since it very slightly lessens the impact on the local government? For example, the club I work at, entertainers have always had to cover private areas and have never been allowed to touch customers or vice versa; however our local government has never required any sort of permit for any employee, unlike the state government. In Texas, we have what is known as TABC, the Texas Alcohol and Beverage Commission. This commission has been put in charge of regulating alcohol consumption regulations, and has also been tasked with regulating the laws set by the state for etiquette in gentlemen’s clubs. For instance, an entertainer is allowed to sit on a patron’s lap, but is not allowed to sit directly on what would be known as the genital region. If this occurs, the entertainer will be arrested on the spot for prostitution and the business where this occurred will face up to a forty-five day shut down and up to a $50,000 fine. This commission has undercover agents as well as agents that frequently stop by every establishment unannounced during working hours. These officers also make quite a hefty salary, more than local police officials at the least.
So who pays for this state wide commission? Tax dollars do. But not tax dollars from the businesses that this commission is set out to regulate. Granted, to be able to serve alcohol in the State of Texas requires a great deal of paperwork, the liquor license is quasi-easy to obtain as long as the person the license’s name is under does not have any felonies. The yearly taxes for any establishment that serve alcohol had to be dropped due to businesses such as restaurants up roaring due to the taxes being too high at first, due to governments trying to tax out adult centered businesses, so the taxes were dropped. So now the state was able to obtain some tax money for these types of businesses, but it was not really rotated around back into the cities that needed it.
This type of business does have its draw backs, but the most notable outside of the tax evasion, is the crime. There has been substantial research done that has supported the idea that adult centered businesses do have an increase of crime around them. “The secondary-effects doctrine holds that adult businesses cause harmful, secondary effects such as increased crime and decreased property values” (Hudson, 2012). With that, will come more issues for the local government. Decreased property values can drastically affect the tax funding in a city. Also with an increase in crime, more police officers, firefighters, and emergency medical technicians with ambulances are needed. What pays for all of that? Taxes do. If these businesses are not participating in paying taxes and are directly negatively affecting taxes, then it can be difficult for local governments to want to protect areas with adult businesses.
“The offenders who are attracted to adult business sites lack legitimate means of livelihood and devote substantial time to illegitimate activities. By Sutherland’s (1937) definition, they are “professional thieves.” Otherwise, they are a heterogeneous group. Some are vice purveyors who dabble in crime; others are criminals who use the promise of vice to lure and lull their victims. Despite their heterogeneity, these predators share a rational decision making calculus that draws them to adult business sites (McCleary & Weinstein, 2009). Adult centered business can attract petty thieves all the way to very violent offenders. I have personally seen this first hand and it is frightening. There is a great need for additional legal personnel when an incident is taking place; however if the people involved have not paid their dues to the societies that are set out to protect them, should they expect the same response if the person were an ethical tax paying citizen? This question may never be answered fully due to the fact that emergency personnel have taken oaths to protect, serve, and assist all citizens, but if they are influenced by local government officials who believe that time is better spent with attention to tax payers, what can be done? Additional regulations could be set forward, but then it could also create more problems, like it did with the liquor taxes and restaurants.
In conclusion, adult centered businesses have been around for some time now and seem to thrive just as cockroaches would if there were an apocalyptic event. These types of businesses have been able to slither their way around all sorts of regulations and laws that were enacted and set forth to take down this type of business. Governments that have simply wanted their municipalities to be clean, ethical, and moral cities with small crime rates and straight A school districts have gone to great lengths to attempt to put these businesses at the least out of their towns. But all attempts have failed. Why and how? Governments have spent millions of tax dollars on attempting to severely limit these types of business to certain areas of town, to certain regulations that make patrons not necessarily want to go, and to even go as far as not allowing these businesses to serve any sort of alcohol. But this is all at the cost of the residents of the town that have paid their taxes and paid their dues to live in a safe environment. So when will this cycle begin to come out of the revolving door and possibly have an end in sight? That is a questions that I can only hope to be answered very quickly, but then again I have not paid the taxes I should have so do I deserve to see an answer?

References

Anthony, Kontju (28 February, 2012). Tennessee considers taxing adult entertainment. WMC-TV 5. Retrieved from: http://www.wmctv.com/story/17040085/tennessee-considers-taxing-adult-entertainment

Carr, Jennifer & Griffith, Cara (2007). Strip clubs, private dances… and taxation. State Tax Notes. Retrieved from: http://www.taxhistory.org/www/features.nsf/Articles/A1E06CD6D08697B08525727300691951?OpenDocument

Hudson Jr., David (22 February, 2012). Illinois Senate considers “pole tax” on adult clubs. First Amendment Center. Retrieved from http://www.firstamendmentcenter.org/ill-senate-considers-pole-tax-on-adult-clubs

McCleary, R., & Weinstein, A. C. (2009). Do “Off-Site” Adult Businesses Have Secondary Effects? Legal Doctrine, Social Theory, and Empirical Evidence. Law & Policy, 31(2), 217-235.

Ryder, A. (2004). The changing nature of adult entertainment districts: between a rock and a hard place or going from strength to strength?. Urban Studies (Routledge), 41(9), 1659-1686.

Smith, K. K. (1991). Zoning Adult Entertainment: A Reassessment of Renton. California Law Review, 79(1), 119.

Sutherland, Edwin H. (1937) The Professional Thief. Chicago: Univ. of Chicago Press.

Thompson, P. M. (2007). The Influence of Popular Culture and Entertainment Media on Adult Education. New Directions For Adult & Continuing Education, (115), 83-90.

Vogul, Ed (26 September 2008). Stripper lawsuit gets OK. Las Vegas Review-Journal. Retrieved from: http://www.lvrj.com/news/15101156.html

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