LEGISLATION
Search by year:Search by state:
California A.B. 847: Regulating and Taxing Sexually Explicit Content
Memo in Opposition to Assembly Bill 847
The members of Media Coalition believe that California Assembly Bill 847 threatens the distribution of First Amendment-protected material in California. The members of Media Coalition represent most of the publishers; booksellers; librarians; recording, film, and video game manufacturers; video and video game retailers; and film exhibitors in California and the rest of the United States. They neither produce nor sell works that are legally obscene. However, they do disseminate a wide variety of material with sexual content, including art and photography books, mainstream movies and music, sex education material, and literary and artistic works.
A.B. 847 would define a business as an "adult entertainment venue" if 50 percent of gross revenue is derived from "adult material" or, if the business allows private or public viewing of such content, the threshold is lowered to 20 percent. "Adult material" is defined as including, but not limited to, any material that has actual sexual conduct, sadistic or masochistic abuse, lascivious display of the pubic region or is harmful to minors. If a business is deemed an "adult entertainment venue," it would be subject to a 20 percent sales tax.
This bill has several constituational defects. Given that it would apply to material based on its content, it is immediately constitutionally suspect. The Supreme Court has repeatedly held that a content-based restriction is presumptively invalid. See, e.g. R.A.V. v. City of St. Paul, 505 U.S. 377, 382 (1992). In order to avoid invalidation, the restriction must satisfy strict constitutional scrutiny. See, U.S. v. Playboy Entm't Group, Inc., 529 U.S. 803, 826-7 (2000). To do so, the government must (1) articulate a legitimate and compelling state interest; (2) prove that the restriction actually serves that interest and is "necessary" to do so (i.e., prove that the asserted harms are real and would be materially alleviated by the restriction); and (3) show that the restriction is narrowly tailored to achieve that interest. See, e.g. R.A.V., 505 U.S. at 395-96; Turner Broad. Sys. Inc. v. FCC, 512 u.s. 622, 664-65 (1994) (state interest must actually be served by the challenged statute); Simon & Schuster, Inc. v. Members of the N.Y. State Crime Victims Bd., 502 U.S. 105, 118 (1991). It is very unlikely that this legislation could satisfy any part of the strict scrutiny test, let alone each part of the test.
The Supreme Court has also routinely found unconstitutional legislation that taxes First Amendment protected speech based on its content. The material used to determine whehter a business is an adult entertainment venue is protected speech unless it is ruled obscene by a court. Leaving aside the uncertainty that the definition of "adult material" is not fully enunciated, the state would have to review the content of books, movies, magazines, and video games to determine whether the content would be used to determine if the 20 percent tax is triggered. This inherently makes A.B. 847 a tax on content. Much of the material that might be sexually-oriented is very much mainstream books, movies, magazines, and video games and could not be taxed on its content. In 1983, the Court held that the power to single out the press with special taxes could be used to coerce or even destroy it and therefore violates the First Amendment, Minneapolis Star v. Minnesota Commission of Revenue, 460 U.S. 575. In 1991, it held that a statute is presumptively inconsistent with the First Amendment if it imposes a financial burden on speakers because of the content of their speech, Simon & Schuster, Inc. v. Members of the New York State Crime Board, 502 U.S. 105 (1991). In 1987, the Court ruled that "official scrutiny of the content of publications as the basis for imposing a tax is entirely incompatible with the First Amendment's guarantee of freedom of the press," Arkansas Writer's Project, Inc. v. Ragland, 481 U.S. 221, 230.
The bill would base the tax on revenue derived from "adult material," which is defined in part as material that is harmful to minors under state law, but would be constitutionally suspect even if the tax were limited solely to material that is harmful to minors or even obscene. It is the job of the courts, not a staff person in the Department of Revenue, to determine if material meets the definition of illegal for minors. This bill does not offer any legal proceeding to determine the legal status of such material. Also, there are no due process safeguards or a right of appeal in place when the determination of the harmfulness of the material is made. In Bantam Books v. Sullivan, 372 U.S. 58 (1963), the U.S. Supreme Court struck down a similar scheme of regulation as a form of "informal censorship." The Rhode Island legislature had created a commission "to educate the public concerning any book or other thing containing obscene, indecent or impure language, or manifestly tending to the corruption of youth." The commission would notify a distributor that a majority of its members had declared a particular work unsuitable for sale to minors and request his or her "cooperation" in withdrawing it from sale. Copies of the notice were then sent to local police departments with a recommendation that anyone selling the work would be prosecuted for obscenity.
The attempt to justify a tax on content as a solution to the "secondary effects" of adult businesses is also likely unconstitutional. The government has the power to regulate the "secondary effects" of sexually oriented businesses, but the Supreme Court has established limits on this power. The regulation must be designed to further an important or substantial government interest; the governmental interest must be unrelated to the suppression of speech; and the regulation must be narrowly tailored to further the government interest in preventing the unwanted secondary effects. City of Eerie v. Pap's A.M., 529 u.s. 277 (2000); Barnes v. Glenn Theatre, Inc., 501 U.S. 560 (1991); Renton v. Playtime Theatres, Inc., 475 U.S. 41 (1986). It is very unlikely that AB 847 would meet this test. Given the low threshold to be deemed an "adult entertainment venue," it is very probable that many mainstream book, music and video stores will be at risk for being subject to this tax. However, there is no evidence that mainstream stores cause the secondary effects cited in the bill nor is there any reason to think this penalty on mainstream stores will prevent unwanted secondary effects this bill seeks to reduce.
Mainstream retailers do not cause any secondary effects, but A.B. 847 would have a serious chilling effect on such store owners. The extremely broad definition of "adult entertainment venue" could impose an onerous tax scheme on many, if not all, of these stores. Whether it is health books, hit movies, or rock or rap records, book, record and video stores all carry mainstream material that includes descriptions or images of sexual activity that could be "adult material." Many retailers would drastically limit their inventory rather than be classified as an "adult entertainment venue" and pay an undetermined revenue tax and other taxes. Also, many would prefer to avoid the negative connotations that go with that label. Beyond the severe financial penalty, store owners fear they would likely lose customers unwilling to shop at an "adult entertainment venue."
This tax may be meant to raise revenue for California. However, if it is enacted, it will be vulnerable to a court challenge. If a court declares it unconstitutional, there is a strong possibility that the state would be ordered to pay the plaintiffs' attorneys' fees. In a recent case brought by members of Media Coalition, plaintiffs received in excess of $400,000 in attorneys' fees and expenses. If you would like to discuss further our position on this bill, please contact David Horowitz at 212-587-4025 #11 or at horowitz@mediacoalition.org.
Please protect the First Amendment rights of all Californians and defeat A.B. 847.
updated 1/1/09
Copyright © 2012 Media Coalition
19 Fulton Street, Suite 407 New York, NY 10038 | Tel: 212-587-4025 Fax: 212-587-2436