SACRAMENTO - Assemblyman Charles Calderon (D-City of Industry) has reduced his proposed California state tax on adult entertainment to 8.3 percent in the latest version of the bill submitted last Thursday.
The bill originally called for a 25 percent tax on adult entertainment, including porn videos, strip clubs and other goods and services. The proposal met with strong opposition from Republicans as well as adult industry lobbyists who denounced the measure as selective taxation.
Calderon has also changed the language of the bill, with proceeds from the proposed tax now directed to the so-called "Adult Entertainment Impact Fund" (previously dubbed the "Adult Entertainment Venue Fund.")
The altered verbiage reflects the bill's foundation in unsubstantiated claims that the adult industry causes harmful "secondary effects" - a spurious argument frequently employed by anti-porn advocates seeking to legislate against Constitutionally protected speech.
The tax would now be levied on the "gross receipts from the sale of qualified tangible personal property, as defined, of a qualified business whose gross receipts from the sale or rental of adult material exceed 50% of all gross receipts of the retail establishment."
The previous version of the bill called for a tax on any business whose gross receipts from adult material exceeded 10% of the business's total gross receipts. As the Free Speech Coalition pointed out, such a sweep could easily include art galleries, mainstream bookstores and any video store that rented or sold a substantial amount of "R-rated" or "Unrated" mainstream videos.
While there are various definitional changes throughout the bill, the reduced sales tax percentage is the most substantial amendment. In addition, the tax would now apply also to "any [adult] item that is digitally downloaded through the Internet, or similar electronic means."
Unlike previous versions of the bill which earmarked the funds to "ameliorate the negative secondary effects" allegedly caused by adult businesses, the latest version says nothing about how the funds will be used.
The bill only addresses the proposed use of the Impact Fund as follows:
"The taxes imposed by this measure are intended to represent a balancing of competing interests. Specifically, these taxes are designed to balance the need to combat the negative secondary effects of the adult entertainment industry against the legally protected rights of adult entertainment producers and consumers."
It is possible that the funds will simply sit in the Impact Fund's account and accrue interest - serving no purpose other than to decrease the profits of the adult entertainment industry.
Calderon's first attempt to tax the adult industry was defeated ten years ago. The current bill was placed on hold in the so-called "suspense file" when it was last brought before the Assembly Revenue and Tax Committee in May.
To view the bill online, click here.