Inversions have been in the news consistently this summer as multiple companies have looked for legal paths away from the U.S. corporate tax system. Burger King became the latest corporation to add to the list after they...
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Judge Rejects Philadelphia's Attempt to Impose Amusement Excise Tax on Exotic Dancers' Lapdance Earnings
If you buy something in Philadelphia, you pay a 8 percent sales tax (6 percent state plus 2 percent city). But if that something is an amusement (sporting event, theatre performance, show, etc.), the state doesn't tax it although the city taxes it at 5 percent. Why such purchases should get preferential tax treatment is beyond me, but it's also led to disputes over what counts as an "amusement" and what doesn't.
Philadelphia Mayor Michael Nutter's administration argued that lap dances performed at strip clubs count as an "amusement," and demanded $1.5 million in back taxes, interest, and penalties from three strip clubs covering the years 2008 to 2010. Last October, the city's Tax Review Board said that the city's amusement tax ordinance did not cover lap dances, but the City persisted. On Wednesday, a state judge threw out the city's argument:
“The ruling is simply that the (tax) ordinance, as it exists, as it’s currently worded, doesn’t cover lap dances,” says attorney George Bochetto (at left below), who represents two of the three clubs that were being taxed. “If the city wants to tax lap dances, they can go to City Council, ask City Council to amend the ordinance, and they can start imposing a tax on lap dances. Or anything else they want: karaoke songs, piano playing. Anything they want. But you have to put it in the ordinance. You just can’t make it up as you go along.”
The city has 30 days to appeal. The court is correct that the City's argument is "vague and inconsistent," trying to make the statute so elastic that they can pick at will what is subject to the amusement tax.
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