Is Pole Dancing a Tax-Exempt Art Form?

By Teresa Ambord

If the owners of the Upstate New York strip club Nite Moves have their way, the Supreme Court will be taking up that question. In the Matter of 677 New Loudon Corporation v. State of New York Tax Appeals Tribunal, the club owners are challenging a $124,921 tax bill levied by state tax authorities and affirmed by appeals court judges. They believe their establishment should qualify for a state tax exemption because the entertainment there is classified as dancing. That is, pole dancing and lap dancing. As the owners contend, dancing is dancing, and dancing is an art form.
"If you saw what these dancers do, you'd be saying, 'it's not the Bolshoi, but it's good,'" said the club owners' attorney, Andrew McCullough, in a hearing of the state's highest court, the Court of Appeals. The prosecution countered with this, from Assistant Solicitor General Robert Goldfarb: "If the women kept their clothes on, no one would be coming to this bar for the dance performances."
Some background
The case goes back to 2005 when the club was audited by the state Department of Taxation and Finance. The auditors said the club owed sales tax on the cover charges and "performance fees" collected from 2002 and 2005. The owners said that the dances, which took place mostly in private rooms, were "choreographed performances," according to a report in the New York Times. The club collects cover charges of $11 per patron and $20 for a lap dance, revenue which the state said is subject to sales tax. 
In the end, the decision went against the club owners, 4-3, declaring that Nite Moves did not qualify for a tax exemption on the basis that lap dancing and pole dancing were not "dramatic or musical arts performances." Interestingly, two of the dissenting judges were women. 
Here's what the dissenters had to say about the case.
Judge Robert S. Smith said it is "not the function of a tax collector" to decide which dance is art and which isn't. "The people who paid these admission charges paid to see women dancing. It does not matter if the dance was artistic or crude, boring or erotic." He disdained the fact that the majority judges were implying that dance had to be "highbrow" to be art; this in spite of the fact that he said he found the exotic dancing distasteful. "That sort of discrimination on the basis of content would surely be unconstitutional."
When one of the judges on the majority side said that dance that qualifies for an exemption is strictly choreographed, dissenting Judge Susan Read pointed out that even ballet dancers sometimes improvise rather than adhering to a strict choreography. 
Chief Judge Jonathan Lippman also dissented, stating that the majority opinion represents a value judgment rather than a legal opinion. 
The majority judges, two men and two women, said the club had failed to prove it should qualify for an exemption for "dramatic or musical arts performances" set out by the state's legislature. That exemption, they said, was made "with the evident purpose of promoting cultural and artistic performances in local communities." They added that their conclusions about lap dances and private dances also apply to dancing onstage around a pole. 
Geoffrey Gloak, a spokesman for the New York State Department of Taxation and Finance, said, "We're pleased with this decision, because it gives similar businesses clear guidance on the issue of sales tax when it comes to live exotic dance establishments." 
Based on Judge Smith's dissenting opinion that the decision of the majority was unconstitutional, the litigants are hoping to take their arguments to a higher level. In early February, McCullough said within ninety days, he would ask the Supreme Court to hear the case. 
The club's CFO Stephen Dick told reporters, "Even if you personally do not agree with exotic dancing, as Judge Smith says in his decision, you still have a duty as an American to stand up to anyone seeking to usurp your constitutional rights."
If the Supreme Court agrees to take up the case, we'll let you know how this odd story ends.

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