In what appears to be a growing trend, one state senator in Pennsylvania is seeking to impose a taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. on adult entertainment services, arguing that such a tax would “remediate the harm they are doing in communities.” More from the Pittsburgh Tribune-Review:
On the heels of a new Allegheny County levy on poured drinks, a McCandless state senator is pitching another sin tax — this one on strip clubs, escort services and pornography sellers.
Republican Sen. Jane Orie said Friday that she will ask the Senate to approve a resolution asking the Legislative Budget and Finance Committee to study the possibility of a 10 percent excise taxAn excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections. on adult-oriented businesses. She said a tax would “remediate the harm they are doing in communities.”
This year Texas has enacted a $5 admission fee — which some are calling a “pole tax” — on strip clubs. And the Utah Supreme Court is preparing to hear arguments over the constitutionality of its 10 percent tax on nude-dancing establishments and escort services.
First, it is worth noting that calling the Texas law a “pole tax” is pretty funny. But these proposals are typically terrible tax policy. Can Orie really justify a 10 percent excise tax as the optimal Pigouvian tax? Not likely.
If adult entertainment is so harmful, maybe it should be banned. But wait … there are First Amendment issues. Most legal experts would agree that a tax on adult entertainment, like an outright ban, would be an infringement on freedom of speech.
Unfortunately, many don’t see such a link when it comes to other selective taxes like those on cigarettes. If you asked someone who supports higher cigarette taxes whether they favor banning cigarettes, they typically say no, arguing that such a policy would be an unfair restriction on individual freedom and have serious black market effects. But these same people have no problem imposing huge taxes on cigarettes that are far in excess of any optimal Pigouvian taxA Pigouvian tax, named after 1920 British economist Arthur C. Pigou, is a tax on a market transaction that creates a negative externality, or an additional cost, borne by individuals not directly involved in the transaction. Examples include tobacco taxes, sugar taxes, and carbon taxes. , which is also an infringement of liberty and has serious black market effects.
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