ACE Sues Over New Georgia Adult Business Tax

FULTON COUNTY, GA—One of the results of the November 2016 election was that voters in Georgia adopted an amendment to their state Constitution which required the owners of adult cabarets, adult video stores and other adult entertainment venues to pay an "assessment" (aka "tax") in the amount of $500 per year or one percent of their gross revenue, whichever is more, with the amounts collected being dedicated to financing the state's Safe Harbor for Sexually Exploited Children Fund as well as a state commission that oversees the fund. The purpose of the fund is to provide care and lodging for the affected children, as well as social programs to help prevent such exploitation.

The tax technically went into effect on January 1, 2017, though the first payment under the tax isn't due until April 30, 2018.

There's just one problem: The tax is on adult businesses—and only on adult businesses—which have nothing to do with sexually exploiting children, so the Georgia chapter of Association of Club Executives (ACE), the cabaret industry lobbying group, is suing the state's Attorney General Chris Carr and Department of Revenue Commissioner Lynn Riley in Fulton County Superior Court to have the new tax declared null and void.

"The tax is unconstitutional because it places a content-based tax on free speech of which certain members of the Legislature do not approve," ACE Executive Director (and former Georgia legislator) Jill Chambers the Atlanta Journal-Constitution.

Indeed; the motivations of the state legislature are clear from the wording of the that was put before the electorate last November: "Shall the Constitution of Georgia be amended to allow additional penalties for criminal cases in which a person is adjudged guilty of keeping a place of prostitution, pimping, pandering, pandering by compulsion, solicitation of sodomy, masturbation for hire, trafficking of persons for sexual servitude, or sexual exploitation of children and to allow assessments on adult entertainment establishments to fund the Safe Harbor for Sexually Exploited Children Fund to pay for care and rehabilitative and social services for individuals in this state who have been or may be sexually exploited?"

Note the juxtaposition of the terms "place of prostitution, pimping, pandering, pandering by compulsion, solicitation of sodomy, masturbation for hire, trafficking of persons for sexual servitude, or sexual exploitation of children" with the term "adult entertainment establishments," as if to suggest that the state's legal adult businesses typically engage in those forms of conduct, when in fact about the most a Georgia cabaret patron can expect is to be offered a lapdance.

"Chambers ... said the members of her organization are offended that the law 'lumps legitimate Georgia businesses' with those who are paying steeper penalties for sex crimes such as prostitution, pimping and masturbation for hire," AJC journalist Maya T. Prabhu reported.

"Children do not congregate at adult clubs," Chambers said. "To be accused of such a heinous crime is unfair, and this is the way that the business owners are fighting back."

The law would appear to be a clear violation of both the First Amendment's free speech clause as well as the equal protection and substantive due process protections of the Fourteenth Amendment, which should prohibit legal adult establishments from being singled out from the rest of the state's commerce for this tax.