In an effort to mitigate California’s looming $15 billion deficit, state lawmakers have been forced to look in unconventional places for money. State Representative Charles Calderon (D-Montebello) has proposed Assembly Bill 2914, which would place a 25 percent tax on the gross revenues of the adult entertainment industry.
Experts have estimated that the porn industry in California earns $3.5 billion to $4 billion per year, placing estimated state earnings from the tax at $665 million.
While such a tax is not necessarily uncalled for, the proposed rate of 25 percent is much too high. Proponents of the bill note that an excise tax on porn products would merely follow in the steps of similar taxes on cigarettes and alcohol. Beginning a tax on adult products, however, is setting a precedent; no other state currently has such a tax. If California is going to set precedent for adult industry taxes, it should be a reasonable amount.
California’s tax on cigarettes ranks 30th in the nation with a rate of 87 cents per pack, according to the Federation of Tax Administrators‘ website. The state’s tax on distilled spirits, $3.30 per gallon, isn’t even in the top 20. A new excise tax should follow previously set state practices.
Some of the reasoning in favor of the porn tax has been that the adult entertainment industry produces “secondary effects” on society that the state often has to pay for. The bill itself says that the tax is justified “because of the ill effects porn has on performers and consumers.“
Using this justification makes it difficult to consider such a high tax; some of secondary effects listed in the bill include drug addiction, assault, disease, rape and prostitution. Such side effects are much more subjective than the health risks that go hand in hand with smoking and alcohol consumption.
The bill is not entirely without reason, however, as the industry does not meaningfully contribute to society, in much the same way as cigarettes and alcohol do not. The bill would also ease the burden on the state’s budget, which is important to consider, although the legislation should certainly be able to stand on its own merits.