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Calderon Tax Bill is Dead

California- Even in the face of an estimated $20 billion budget deficit, a bill that would raise revenues by imposing a 25% tax on earnings of the pornography industry is meeting with stiff resistance in the California legislature, with opponents claiming it would drive a multi-billion-dollar industry out of the state.

The bill, AB 2914, authored by Assemblyman Charles Calderon, D-Whittier, would levy a 25% tax on gross revenues from the sale of pornographic magazines, photos, books, films and videotapes, and on the gross earnings of live sexually explicit entertainment and pay-per-view pornography provided to hotel guests.

According to a legislative analysis of the bill, it could raise up to $665 million a year in new revenues for the financially strapped state.

“AB 2914 would tax adult entertainment and adult entertainment venues in a manner similar to the way in which cigarettes and alcohol are already taxed in this state,” said Calderon in the legislative analysis. “Currently, these two products are taxed at higher rates, and the additional revenues are used to address the negative effects of their use. This measure would tax adult entertainment in a comparable manner, with the intent to use the funds to address the various secondary effects associated with the production and consumption of adult entertainment. The secondary effects of production are especially noteworthy as California is the capital of the adult entertainment industry in the United States.”

Money raised by the new tax would be used for “law enforcement, testing and treatment of sexually transmitted diseases, treatment for drug and alcohol abuse, health care and mental health treatment,” said Calderon. “AB 2914 does not make a judgment on the adult entertainment industry. It merely asks the industry to help mitigate some of its ancillary effects in the state that is its production capital, not unlike the state already does with alcohol and cigarettes.”

At a May 12 hearing, opponents testified that imposing a 25% tax on porn industry profits could drive the business out of California, at a cost in jobs and other revenues of as much as $3.5 billion. It would have an especially hard impact, witnesses testified, on the San Fernando Valley, said to be the “porn capital of the world.”

Republicans in the legislature have indicated they would vote against the bill because it is a tax increase and they oppose any tax increase of any stripe. Under state law, tax increases require a 2/3 majority of both houses of the legislature.

Following the May 12 hearing, Calderon’s bill was referred to the “suspense file” of the Assembly Committee on Revenue and Taxation. Although theoretically the bill could be taken out of the suspense file and considered again, the move most likely means the measure is dead for this session of the legislature.


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