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

Sunday, Dec. 21, 2008 | 2 a.m.

Carson City — 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.

Discussion: 13 comments so far…

By FTW

12/21/08 at 3:24 a.m.

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How about the shamefully low mining tax? Or the lowest-in-the-country gaming tax? Considering the billions of dollars these industries pull in while using the state's resources, they are far from paying their fair share.
By LT2LV

12/21/08 at 8:19 a.m.

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Give me a break. Who cares if the money comes from taxing whorehouses? Money is money. Nevada is broke and could some of it. If collecting revenue from brothels is such a taboo, then they shouldn't be legal at all.
By homer

12/21/08 at 8:52 a.m.

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The taxes paid by gaming in other states is as much as twenty-five percent, while Nevada pays 6 and one-half per cent. Meanwhile Murren of MGM Mirage has the audacity to remind other industries they must pay up, all the while these so called executives earn some of the most outrageous saleries and stock options known to man. Think about that as your children and grandchildren get one of the worst educations in America.Nevada ranks right with poverty stricken Mississippi and Alabama in education.
There has been revelations these gaming executives do not have the education and degrees they claim to have on their resumes, meanwhile they still keep on working while anyone else would have been fired immediately for these actions.
By insideinfo77

12/21/08 at 9:09 a.m.

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These are the same people who won't legalize online poker. Party Poker just paid 300 million in fines for taking bets from US customers. We would have a surplus beyond imagination if we legalized it here and taxed it correctly. People would be more willing to play on a site that they know the rake would go toward funding their state.
By johnevegas

12/21/08 at 9:52 a.m.

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Dumb dumb dumb. How is it good public policy to allow something but pretend it doesn't exist? If it's good enough to legalize and regulate and as a business, then it's good enough to be taxed as a business.

That money is either clean or it's not. It seems to me that decision was made a long time ago.
By ths

12/21/08 at 11:02 a.m.

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Gaming is taxed before expenses in this state where all other states allow expenses to be written off before taxing.

Mining gets to write their expenses off before taxing.

Compare apples to apples. The most secure way to prevent a rollercoaster budget is to diversify. While people might not like Murren of MGM he is a business man that understands diversity. A business tax would tax more businesses but it would as well tax the gaming industry so in turn they would be further taxed.
By opinion101

12/21/08 at 11:15 a.m.

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Here we go again. Someone always tying whorehouses to mining again. Let me just repeat the facts again : Mining is the 16th largest industry in the State of Nevada. Economic conditions are very unstable currently with gold, oil, steel, chemicals, blasting agents, housing, labor prices swinging to new highs and lows in less than 6 months. The risk of investing 100's of millions of dollars of capital (if you can get investors to do so during the current recession) to continue mining gold or developing new gold mines is very risky and adding additional taxes to mining will cut the current economic amount of gold available that is still in the ground unmined. The worst the economics the less ore is mined, the smaller the workforce required, and the less taxes that can be collected from the Mining Industry and the 14,470 Nevadans working for mines. Then the current 90% of sales and use taxes paid by mining that goes directly or indirectly to Clark and Washoe counties' general budget, education and expenditures will be reduced tremendously and the significant role mining plays on the rural Nevada revenue will be reduced (and will be then funded by Clark and Washoe counties). I can't make any sense out of this as a solution. What about the top 5 Nevada industries? Is there some room to tax real estate, accommodation/food services, construction, government or retail trade? Probable not, during the current recession. What is the solution? Budget cuts, hiring freezes, salary reviews? Yes, to all of the above and an overall sales tax increase. Hopefully, people will be buying to generate this sales tax. Individuals are able to budget their income, the State must do it too!
By davidwayneosedach

12/21/08 at 11:16 a.m.

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"Cash money never knows it owner."
By LasVegas2009

12/21/08 at 1:29 p.m.

Comment removed by staff.
By Hactin

12/21/08 at 6:09 p.m.

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Use the new cash flow to improve your educational system and develop solar power and battery expertice.
By johnevegas

12/21/08 at 7:12 p.m.

Comment removed by staff.
By opinion101

12/21/08 at 8:15 p.m.

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Your right johnevegas. And both businesses usually do well in the same city, makes life as a miner very interesting. Thanks Mona. We will all pay our taxes equally, side by side. And thanks Harry Reid for backing both these industries.
By blender88

12/22/08 at 12:04 p.m.

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They are going to do it anyway... stop being so stupid people take the money.

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