Vegas strip clubs attack entertainment tax
January 8, 2014
Nevada's live entertainment tax, a revenue generator expanded over the years and riddled with exemptions, was attacked Wednesday by Las Vegas strip club owners who argued it amounts to an unconstitutional levy on protected speech and expression.
In arguments before the Nevada Supreme Court, lawyers for the clubs argued the tax violates the First Amendment because it targets adult entertainment content.
"This is a direct tax only on expression," said Bradley Shafer, representing the seven club owners.
The strip clubs featuring nude and topless dancers have been paying the 10 percent tax for the past decade but want a refund from the Department of Taxation. The amount of refunds sought has not been disclosed.
But Blake Doerr, senior deputy attorney general for the tax department, countered that the levy began as a casino entertainment tax and was expanded over the years to "sweep in" similar activities at other venues.
Doerr dismissed Shafer's contention that it taxes expression, saying the dancers themselves are not taxed to perform but rather patrons are charged to attend. He described it as a tax on a business transaction with "no intent to stifle the message."
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"The Legislature did not look at any industry in an attempt to stop what they were doing," he said.
But some justices questioned the numerous exemptions that have been carved out, such as for NASCAR races, baseball games and outdoor concerts not held on a casino property.
Justices Kristina Pickering and Michael Douglas wondered about the "family type" entertainment exemptions and the narrowing effect they had on the application of the law.
The court took the arguments under advisement and will rule at a later date.
The law itself was debated during the 2013 Legislature, when Assembly Speaker Marilyn Kirkpatrick undertook a failed crusade to revamp it or abolish it in favor of a broad-based admissions tax.
Most revenue from the live entertainment tax is generated by casinos from everything from lavish productions in showrooms to lounge acts. The tax brings in about $130 million a year.
A 10 percent tax rate is applied on smaller venues based on admission charges, merchandise, food and refreshments. For events held at facilities with occupancy of 7,500 or more, the tax rate is 5 percent on admissions only.
This list of exemptions is extensive and includes some of the largest events in the state, such as the Burning Man festival on the Black Rock Desert and the Electric Daisy Carnival.