SALT LAKE CITY — The Utah Supreme Court upheld a state tax on nude strip clubs Nov. 20, but ruled that it shouldn’t apply to escort services because the state’s definition of an escort is too vague, possibly subjecting companions for the elderly and tour guides to the tax.
The court’s 4-1 ruling Bushco v. Tax Commission, however, could clear the path for other states to place similar taxes on adult-oriented businesses.
In 2004, the Utah Legislature became one of the first in the country to enact a 10% tax on sexually explicit businesses in an effort to pay for sex-offender treatment. The tax covered everything a sexually explicitly business sold — admission, T-shirts and hamburgers included.
A group of escort agencies and strip clubs challenged the constitutionality of the law, saying it was overbroad and violated their First Amendment rights. Meanwhile, a host of other states held off on passing their own sexually explicit business taxes while the case made its way through Utah’s court system.
The Utah Supreme Court ruled that the Sexually Explicit Business and Escort Service Tax is not a violation of the First Amendment but that it is unreasonably vague when it comes to escort services.
“The Tax fails to provide adequate information for a person of ordinary intelligence to distinguish between those types of compensated companionship that the legislature intended would trigger application of the Tax and those that it intended would not,” the court wrote.
The court ruling said taxing nude dancing is not a violation of First Amendment rights because the tax is applied regardless of whether someone is dancing or not.
Chief Justice Christine Durham dissented.
“This First Amendment protection of nude dancing is clear. It does not dissipate in the face of majority opinion or government decree,” she wrote. “Nor is it lessened because the expression is ‘not very important,’ ‘shabby, offensive, or even ugly.’ ”
Andrew McCullough, an attorney who represented the coalition of adult businesses, said if he can get his clients to agree, he will try to appeal to the U.S. Supreme Court.
“The implication is that the Supreme Court said that they’re not taxing dancing, they’re taxing nudity. Frankly, that’s just preposterous. They are taxing artistic expression and it’s just wrong,” he said.
McCullough acknowledged that getting the U.S. Supreme Court to hear any case is difficult, but he believes this one has merit.
“I think honestly, this one is going to be accepted because it’s a very important, very unique and very new question and because there are in fact at least 12 other states out there who are going to be doing this soon based on the tenor of the decision here in Utah,” he said.