Albany strip club Nite Moves challenged a 2005 audit by claiming that lap dances were exempt from taxation, just as ballet performances are (I wrote about some of the sillier commentary inspired by the case). Their appeal wound up in front of the New York Court of Appeals, and today they ruled against the club, 4-3. From the decision*:
Clearly, it is not irrational for the Tax Tribunal to decline to extend a tax exemption to every act that declares itself a “dance performance.” If ice shows presenting pairs ice dancing performances, with intricately choreographed dance moves precisely arranged to musical compositions, were not viewed by the Legislature as “dance” entitled a tax exemption, surely it was not irrational for the Tax Tribunal to conclude that a club presenting performances by women gyrating on a pole to music, however artistic or athletic their practiced moves are, was also not a qualifying performance entitled to exempt status. To do so would allow the exemption to swallow the general tax since many other forms of entertainment not specifically listed in the regulation will claim their performances contain tax-exempt rehearsed, planned or choreographed activity.
The court is correct in pointing out that there are other planned performances that are not exempt, but their decision still rests on a value judgment on what is or isn’t “qualifying.” It’s true that many other forms of entertainment don’t get the exemption that theatrical performances do; not rock bands, not burlesque performances, not (great example!) ice dancing. So it’s not that the dancing at Nite Moves fails to qualify as art, it’s that it, like these other taxed performances, isn’t highbrow enough for the exemption. The majority opinion also calls into question expert witness and exotic dance scholar Judith Lynne Hanna’s testimony, which was based on observation of stage performances and not private dances, asserting that there is not sufficient proof that they are the same types of performances. Whether or not that would have actually made a difference, we’ll never know.
The closeness of the decision illustrates just how much it rests on opinions about what is and isn’t art. While there is certainly artistic merit to the performance component of stripping, it clearly falls into the same category of performance as bands in clubs or standup comedy rather than the opera. That is mostly a function of production values (low) and the allowable level of improvisation (high). The tax exemption could be seen as a value judgment, although the language in the tax code isn’t specific enough to infer or clarify one. And that’s precisely what the dissenting opinion asserted: the vagueness of the language means a lot of potential value judgements about which art should be exempt:
The ruling of the Tax Appeals Tribunal, which the majority upholds, makes a distinction between highbrow dance and lowbrow dance that is not to be found in the governing statute and raises significant constitutional problems. I therefore dissent.
The majority implies that since the Legislature did not exclude from the entertainment tax other lowbrow forms of entertainment, such as baseball games and animal acts (see majority op at 2), it would not have wanted to exclude pole dancing; but the issue is not what the Legislature would have wanted to do, but what it did. If the Legislature wanted to tax all “choreographic . . . performances” except pole dancing, it could (assuming there are no constitutional problems) have said so, but the Tribunal has no authority to write that exception into the statute.
I have little sympathy for clubowners who are creatively trying to avoid paying taxes while collecting a large percentage of dancers’ earnings and believe Nite Moves should pay their damn taxes. But the language of the NY tax code really doesn’t back this judgment and should be rewritten, else I imagine challenges like this will continue.
*read the opinion. It’s brief and interesting.