At issue, is whether private dances at the Nite Moves Gentlemen's Club near Albany, N.Y. should be subject to the sales tax. Despite the fact that the panel admits that pole dancing is indeed difficult to do and requires special skills, they claim the dances are not choreographed like ballet. And in the state of New York choreographed performances, along with other state-approved acts of artistic expression, are exempt from the tax.
As a result of this ruling, Nite Moves now owes New York State roughly $129,000 in back taxes. The latest decision, which was handed down last month and is now on appeal, overturns a previous ruling from an administrative law judge that pole dancing has clearly-defined movement and therefore can qualify as art.
Pirouettes Versus Pole Dancing
"With regard to whether it is a choreographed performance, we note that the record sets forth how the dancers help each other when they are getting started, how they view other dancers on YouTube and practice the dances they see on the Internet," the two-person Tax Appeals Tribunal says. "We question how much planning goes into attempting a dance seen on YouTube."
Attorney Andrew McCullough, who represents Nite Moves, doesn't understand how the state can logically differentiate between pole dancing and other forms of dance, which are exempt from the sales tax. "It was a decision that was based on repudiation," he says. "Can you really get away with claiming that our people are not dancing?"
The New York ruling also strikes a nerve with former Penthouse Pet Ryan Keely who does special guest performances at strip clubs throughout the state. Keely says she hired a coach to help her develop her moves.
"Exotic dance is a direct decedent of the fertility dances that you see going on around the world," says Keely, 25, who runs a pornographic website and has appeared in adult movies. "It is also similar to Chinese pole gymnastics. [Pole dancing] is something that takes lots of skill and lots of practice."
Indeed, Keely notes that injuries from pole dancing occur because some of the dancers are intoxicated and clubs lack mats that would cushion their falls. Since performers are considered independent contractors, many lack health insurance and therefore are not eligible for workman's compensation.
The Slippery Slope of Targeted Taxation
Courts have generally ruled that nude dancing is protected by the First Amendment, which makes the Nite Moves case especially worrisome. In essence, New York is deciding which forms of entertainment are legitimate and which are not. First Amendment lawyers say that it is wrong for the government to decide which expressions of creativity it supports using tax policy.
"If you want to only tax exotic dance then you are now selectively enforcing the tax code and practicing censorship through taxation. Whether you like the message we offer or not it is in everyone's best interest to defend our right to say it," says Nite Moves club owner Stephen Dick.
The Nite Moves case potentially has national ramifications. Adult entertainment makes a tempting target for taxation as state and local governments scramble to find new sources of revenue. The businesses generate lots of cash and are generally considered a vice like drinking alcohol or smoking cigarettes (also big taxation targets). As The Wall Street Journal recently reported, the state of Texas is arguing before the Supreme Court that a "pole tax" does not violate the First Amendment. A Georgia State senator proposed a similar idea last year. That bill failed to pass during the latest legislative session after heated opposition from club owners. In 2008, legislators in Florida proposed a sales tax on "adult entertainment services" that would go toward funding services for low-income senior citizens.
So-called targeted taxes have also been tried before. Huey P. Long, the demagogue who ran Louisiana during the Great Depression, levied a tax against the state's newspapers, which was later struck down. Esquire magazine won a similar battle in the 1950s. A spokesman for the New York Division of Taxation declined to comment.
"Any kind of content-based tax is inherently suspect," says Bob Corn-Revere, a partner with Davis Wright Tremaine LLP in Washington who has represented strip clubs in similar cases. "It's a kind of results-oriented logic that is very dangerous."