The cruel paradox for Las Vegas strip clubs is that free speech isn't cheap in this town. Not by any means. For not only does that First Amendment business have to cope with lawmakers' ineluctable finger, but it also is the subject of a steep and contentious tax.
If there was any doubt that NRS 368—the live entertainment tax—was conceived and crafted with the city's gentlemen's clubs and all their ungodly profits in mind, then it became clear during the legislative debates that took place in 2003, when the statute was introduced, and 2005, when discriminatory provisions were added to the tax. And then it became incontrovertible last week, when Senate Minority Leader Dina Titus, the tax's progenitor and a gubernatorial candidate this year, made public statements asserting that, yes, strip clubs were targeted by the Legislature, and for good reason.
"Their intentions aren't a secret," says Brad Shafer, a Michigan attorney who filed a federal court complaint on behalf of his clients—the city's eight most lucrative strip clubs, which have put aside their cutthroat competitiveness to stand in solidarity against the live entertainment tax, which costs them each hundreds of thousands of dollars a month. "It's blatantly against adult entertainment businesses—against First Amendment expression."
In actuality, the law had been enacted to impose a 10-percent tax on all food, beverage and merchandise sales (on top of the 7 percent sales tax), as well as on admission tickets at nongaming entertainment venues such as Las Vegas Gladiators football games, the National Finals Rodeo at the Thomas & Mack and concerts off the Strip.
But the language of the law was alarming, for its definition of "live entertainment"—activities provided for pleasure, relaxation, recreation and diversion, such as music, dancing, acting, and acrobatics—and its qualifications for eligibility—nongaming establishments with seating capacities between 300 and 7,500—appeared to be aimed toward strip clubs; and so it provoked the constitutional advocates at the American Civil Liberties Union of Nevada to set off their sirens.
The ACLU warned lawmakers that, as written, the statute contained significant constitutional infirmities, and that it would not endure.
The sponsors of the tax must have taken them to heart, says Gary Peck, executive director of Nevada's ACLU, because not only did they seek the advice of the Legislative Counsel Bureau, but they also tried to implement an outrageous provision that would bar the tax from being challenged in court.
Yet that would not come until much later. That is, not until after two critical provisions were added to the tax in the 2005 Special Legislative session. One was the seating capacity of taxable venues. After lawmakers articulated confirmation that they could catch more strip clubs, and thus more money, by dropping the seating capacity (whose language at that session would be changed to "maximum occupancy"), they lowered the minimum to 200 persons. The second was the exemptions to the tax. NASCAR, along with a few other forms of entertainment, were exempted.
The Department of Taxation says exemptions were made on account of the economic benefits those particular businesses presented to the state, but Brad Shafer and the ACLU understood it to mean that the list for exceptions to the tax was infinite, and inclusive to everyone but the strip clubs, which no doubt pump incalculable sums into Southern Nevada's economy.
Titus had already tried to make this all explicit. She had attempted through legislation to narrow the tax's scope to the strip clubs exclusively, using the same pretext that she would offer last week, when justifying the current live entertainment tax: gentlemen's clubs, she says, place a special burden on the community, for they pay neither payroll taxes nor employee insurance and benefits, and they place undue stress on the state's social services and police forces.
Yet some clubs, like Olympic Garden, do indeed pay insurance and benefits to their full-time employees, and the ones that don't are not alone in this state, by any means. And Metro says the evidence just does not support the claim that police and social services are required any more on account of strip clubs than any other business.
"It's disingenuous," says ACLU general counsel Allen Lichtenstein, "when they say they are just trying to recover costs."
The ACLU's position is that the government is clearly seeking to raise revenue off of one particular business, imposing special taxes on it, which is utterly unconstitutional.
But the real problem of the matter is, according to Peck, the principle: Lawmakers are deterring free expression through economic disparity.
"Strip clubs are a disfavored industry in many segments of our community," says Peck. "They are an easy target."
Which is the reason that, despite being recognized as a business protected by the First Amendment, strip clubs find themselves climbing mountains and sidestepping obstacles from which other businesses are free.
And perhaps, beyond the adultery and blow jobs and drama, it's the reason behind Las Vegas' G-Sting fiasco. Had Michael Gilardi been able to run his businesses in the frictionless domain other businesses enjoy, would he have had to pay elected officials bundles of money to attain those liberties of motion?
It all comes down to sex, Peck argues.
Authorities have a hypocritical and ironic aversion toward sex, he says, for they continually burden explicit venues, like strip clubs, while turning a blind eye to implicit ones, like those on the Strip. Which, in reality, blur the line between implicit and explicit on such a constant basis that sometimes the only distinctive line between the two is that right now tax coffers are filled with money from the Strip and not the strip clubs.
The federal complaint Brad Shafer has filed on behalf of the eight strip clubs against the Nevada Department of Taxation, which administers the tax, and the Nevada Senate Committee on Taxation, which approved the tax, has yet to find its defendants' offices.
"It's tough to respond to any of their complaints if we haven't even seen the documents," says Dino Dicianno, executive director of the Nevada Department of Taxation, who did reiterate that while there have been justified exemptions to the tax, several other entities besides strip clubs are still subjected to it.
Shafer says that as soon as the defendants answer (and no one anticipates capitulation), he intends to file a preliminary injunction motion, and, with expediency from the court, have the matter resolved within a few months.
But no timetable has been established, and the clubs will continue to pay the tax indefinitely.
"Yet again," says Peck, "lawmakers are going to defend an indefensible law with taxpayers' money. They have gained confidence from the Legislative [Counsel] Bureau, but we all know the Bureau isn't objective, and the record shows that when the ACLU raises an issue, we win, even if the Bureau had supported Legislature."
Lichtenstein says that he will draft an amicus brief in support of the strip clubs, and that there is little precedent in this specific issue because no one but Nevada has blatantly violated the First Amendment in this particular way.