So, while listening to ‘All Things Considered’ a few days ago I stumbled upon a report about a small town that was actively promoting itself as a location for strip clubs. The city government realized that some people would regard it as unsavory but they needed the tax money to support city services and this was the means they’d arrived at to close the gap.
And that got me to thinking that there’s a lot of potential tax money left on the table out there. Governments have already established the concept that unsavory practices can be tolerated if it fills the coffers…
Cigarettes are considered ‘bad’ but are a lucrative source of tax revenue.
Alcohol, despite attempts at controlling it (and even an outright ban at one point), remains legal and is a lucrative source of tax revenue.
Gambling, once illegal through most of the land, is now becoming effectively legalized and is becoming a new and important source of tax revenue. Robert Ehrlich, current Governor of Maryland expended a great deal of political capital attempting to bring slot machines to Maryland racetracks this year with the justification of closing a budget gap. It failed…but not by much, and it’ll be back next year.
So how long is it before some enterprising government type realizes the potential gold mine in prostitution? Nevada has legalized prostitution in some regions and derives revenue from it. Mexico has legalized prostitution at its ‘boys town’ areas and derives revenue from it.
At some point I think it’s inevitable that a governor, faced with a balanced budget requirement in his state constitution and an enormous deficit, will discover that it is politically less painful to legalize, regulate and tax prostitution than it is to cut services to some part of his voter base. At that point we begin to hear the trial balloons floated by junior aides ‘on background’.
From here: http://www.albany.edu/sourcebook/1995/pdf/t410.pdf
I see that in 1995 there were 61,000 arrests for prostitution and ‘commercialized vice’ in the United States. I don’t think any of us would think that’s the sum total of all prostitution transactions in the country. Let’s…
Think of that number at 5% of the prostitutes in the USA.
That each ‘service’ performed costs $75.
That each prostitute will service 20 clients per week.
That each act had a 5% sales tax included
That would work out to sales of $1,830,000,000 or sales tax income of $91,500,000.
In addition, the income of the prostitutes will suddenly be taxable income. Say they hit a rate of 10%.
That would work out to personal income tax of $366,000,000 now in the hands of state, local and federal government.
There are governors who would, quite literally, kill for an extra 10 million dollars in the till.
I’m not even including licensing and inspections fees (God help me) or even the cost savings of not having to police the street for prostitution or the theory that it would lead to increased economic activity beyond the prostitution.
I don’t want this to be a debate about the legalization of prostitution and the pros and cons.
I’d really like to debate whether this will occur to our elected leaders as a source of income and, if so, how long will it take before we start to see prostitution as just another unsavory but good for the tax coffers habit of some people.
Fifty years? 20? Five?