TEXAS SUPREME COURT UPHOLDS TAX ON STRIP CLUBS DESPITE FIRST AMENDMENT CHALLENGE

On Friday, the Texas Supreme Court reversed the decisions of two lower courts and held that the Texas Sexually Oriented Business Fee Act does not violate the First Amendment. That statute requires nightclubs, bars, restaurants, or other similar businesses that provide live nude entertainment and on-premises consumption of alcohol to pay a mandatory tax of $5 ”for each entry by each customer admitted to the business.”

Two lower courts had previously struck down the statute as unconstitutional, reasoning that erotic/topless dancing is protected expression under the First Amendment, and that the fee was a content-based tax on such expression. The Texas Court of Appeals, whose decision was reversed by the Texas Supreme Court on Friday, held that the statute “single[d] out a specific class of First Amendment speakers” who were “conveying a message that the taxing body … considered undesirable,” and that the statute was therefore “particularly repugnant to First Amendment principles.”

Nevertheless, in its decision on Friday, the Texas Supreme Court reversed the lower courts and upheld the constitutionality of the statute on the basis that the statute’s infringement on expression was minimal, and because the tax might help reduce “the secondary effects of nude dancing when alcohol is being consumed.” While the court was referring to crime, prostitution, sexual abuse, etc. (according to the Texas Supreme Court, “the fee provides some discouragement to combining nude dancing with alcohol consumption”), it glossed over the fact that the evidence at trial supported only a “possible” link between the business activity subject to the tax and those secondary effects. And it entirely ignored the fact that, while the first $25 million collected is earmarked for a sexual assault program fund, all money collected after that is used to subsidize health insurance premiums for low-income persons — something that has nothing whatsoever to do with the “secondary effects” of combining nude dancing with alcohol consumption.