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September 21, 2014

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Brothel industry says ‘tax us;’ state says thanks, but no thanks

The brothel proprietor in a white camel-hair coat and fedora walked into a legislative hearing room with a woman on each arm.

Joe Conforte, owner of the famed Mustang Ranch, told lawmakers it was the brothel industry’s patriotic duty — its duty! — to pay more taxes.

It was 1991.

Ultimately, the Legislature declined Conforte’s offer to accept a “bedroom tax,” voting down a sales tax on services.

The brothel industry tried again in 2003 to get itself taxed. Again, it was rebuffed.

And it is likely to be in the upcoming legislative session.

Most every other industry is running for cover as lawmakers look for revenue to bridge a deepening budget shortfall, but brothels are open to the government getting a cut of the action.

Local governments get huge fees to license brothels, which are legal in Nevada’s less populous counties. The state, however, receives no tax revenue from the industry.

It would be a no-brainer, right? We may be selling a service that’s illegal in the other 49 states, but it’s all so little Johnny can have textbooks.

Alas, no.

“Certain people almost get the hives when you bring us up,” said George Flint, president of the Nevada Brothel Association. “I was talking to the speaker of the Assembly the other day, and she told me, ‘As bad as it is, we’re not hurting so much we want to use that kind of money.’ ”

Speaker Barbara Buckley did not return a call for comment.

So why is the industry open to paying more? One theory is that a hefty state tax would grant credibility to the industry.

Flint said that in 2003, during a massive fight over raising taxes, the industry volunteered to pay up under the live entertainment tax. Even though the state’s brothels, in rural counties, don’t hold more than 300 people — the threshold under the law — they agreed to pay the tax.

The bill, according to Flint, was gaining momentum. But then he made a tongue-in-cheek comment that brothels would hang a picture of then-Gov. Kenny Guinn with a hand out in every brothel bedroom in the state.

After that, there seemed to be less enthusiasm for the tax.

“I don’t think Guinn wanted as part of his legacy that he taxed” brothels, Flint said.

It’s not that the industry wants to be singled out, exactly.

“This business is suffering like any other business,” Flint said. “We want to pay our fair share.”

Then he paused and acknowledged a fact of life for an industry that, although legal, operates largely out of sight of the state’s population.

“It’s also a life insurance policy. The longer we go, the more people move here from out of state, we face a death sentence,” he said. “If we pay into the state general fund, the state might say ‘Hell, we can’t give this up. They pay too much.’ ”

Carole Vilardo, president of the Nevada Taxpayers Association, agreed.

“Once a government gets a tax revenue source, it’s not going to let it go away,” she said.

Vilardo, who was in the room during the 1991 Conforte hearing, recalled the scene.

Flint, who was also there, confirmed the story, but said Conforte was accompanied to the legislative hearing by only one woman. (A Las Vegas Review-Journal account from 1991 seems to back Flint’s version.)

For Conforte, paying taxes wasn’t always a patriotic duty. He fled to Brazil later in 1991, ahead of federal grand jury indictments accusing him of owing the U.S. government $13 million in back taxes.

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