Economics, Taxes and Spending

Perry’s ‘Pole Tax’

In my latest article for the Washington Post, I write about Mitt Romney’s strategy to stop Rick Perry’s surge in the polls. Among the issues that Romney advisers plan to use against Perry is the charge that he raised taxes as governor of Texas. (Perry’s team argues that his 2006 tax reform—necessitated by a court ruling against our school finance system—was a big net tax cut).

No doubt the two sides will battle it out in the coming months. But there is one Perry tax that Team Romney is not likely to discuss during the course of the campaign: the Texas “Pole tax,” which was declared constitutional last Friday.

The Fort Worth Star Telegram reports:

The [Texas] Legislature in 2007 approved, and Governor Rick Perry signed, the law requiring alcohol-serving clubs that offer nude dancing to pay the $5-per-head fee. Teetotaling nude clubs aren’t assessed; neither are bars where the dancers wear “fully opaque clothing.” This is one tax that tax-averse state leaders like: The goal was to help fund sexual assault prevention programs and health insurance for low-income Texans.

A club in Amarillo challenged the law, arguing it infringes on a constitutionally protected form of expression: nude dancing. Two lower courts agreed. But on Friday, the Texas Supreme Court upheld the constitutionality of the “pole tax.”

“The fee in this case is clearly directed, not at expression in nude dancing, but at the secondary effects of nude dancing when alcohol is being consumed,” Justice Nathan Hecht wrote for the court.

The Associated Press reports that the comptroller’s office has collected about $15 million so far from the pole tax (though not all of the eligible clubs have paid it while the legal challenge has been pending). Somehow, despite this new tax burden imposed by Governor Perry, the Federal Reserve Bank of Dallas reports that “Texas has accounted for 49.9 percent of net new jobs created in the United States” since June 2009—though the Dallas Fed has yet to report on the status of Texas job creation in the nude dancing sector.

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