Freedom of speech has been a cherished right in our country ever since the Constitution was ratified more than 200 years ago. This essential component of the First Amendment has protected those who have publicly criticized our government, expressed opinions that may be deemed offensive by some, or wear clothing that symbolizes a particular view point. Or, as a recent case here in Texas has proven, freedom of speech can be used as a defense by some hard-working professionals who choose to wear no clothes at all. A Travis County district judge (here in Austin) recently ruled that the state of Texas could no longer charge a $5.00 per patron tax on the owners of nude dancing establishments, as this tax targets a protected form of expression, and the Texas House jumped into action this week to determine an appropriate alternative.

House Bill 982, which is sponsored by Rep. Senfronia Thompson (D-Houston), would require a ten percent tax on admission fee to all sexually oriented businesses. This legislation would include not only topless dancing clubs, but also adult video and book stores. This tax will raise anywhere between four and eight million dollars for the Texas state coffers, with three-quarters of the funds going to sexual assault programs and the rest promised to public schools. Isn’t it good to know the source of the money for Johnny’s new science book?

Critics of the proposed bill believe it is too much of a compromise to the adult entertainment industry, as most video stores do not even charge an admission fee and strip clubs can choose to lower their cover charges to reduce the taxes they would owe. The state has not given up on the $5.00 per person tax option, as the case is currently pending appeal in Austin’s 3rd Court of Appeals. Estimates show that this current law, passed in 2007, raises three times as much money for the state as would be gathered under the bill offered by Rep. Thompson.

Be advised that this law firm does not condone (let alone advocate for) strip clubs in any way.  But we do believe in free enterprise and the legal right to run and operate a legitimate business.  If you own a business in Texas that is being incorrectly taxed by the state or if the restructuring of tax laws is requiring a change in your business plan, the business lawyers in Austin, San Antonio, and Houston at Bertolino LLP can help. We have business litigation attorneys ready to help. Please contact our Austin, Houston, or San Antonio office today. http://www.belolaw.com

By: Tony R. Bertolino