Is There a “Porn Tax” in Your Future?

Is There a “Porn Tax” in Your Future?

By Mark Nestmann • April 9, 2019

The pornography (porn) industry is worth almost $100 billion. Laws that banned porn were struck down more than 50 years ago, so in all 50 states, you can download adult content all you want. Or consume porn the old-fashioned way by reading dirty magazines.

Companies that distribute pornography, of course, already pay taxes on their profits. But legislators in at least 18 states are anxious to ensure they’re getting their “fair share” of the financial bonanza.

One recent effort is in my home state of Arizona. Republican state senator Gail Griffin has introduced HB 2444, the "Human Trafficking and Child Exploitation Prevention Act." The bill would require any manufacturer or supplier of any product that provides access  to the internet to block residents of Arizona from accessing adult content. The filters would need to block all forms of porn and “any hub that facilitates prostitution.”

The only way that those living in our fair state could have uncensored internet access would be to prove they are at least 18 years old and pay a $20 unblocking fee to the state. Revenues from fees would go into a fund called the John McCain Human Trafficking Fund. The fund would make grants for projects that "uphold community standards of decency." The highest-priority grant would be to help pay for construction costs in Arizona of President Trump’s proposed wall along the US-Mexico border. This seems odd, since McCain criticized the border wall.

Approximately 5.2 million of the residents of Arizona are over 18 and could legally watch porn under Griffin’s bill. If every one of us were to buy a “porn license,” the state would raise around $104 million. This won’t go far to fund the border wall, which is estimated to cost more than $25 billion. It’s unlikely, though, that all 5.2 million residents would pay the fee.

Of course, if Griffin amended her proposal to require a $20 annual license fee, the state could create a significant continuing revenue stream.

The Electronic Frontier Foundation has tracked similar proposals in several states. They appear to all be the brainchild of disbarred attorney Mark Christopher Sevier, who has filed numerous lawsuits against technology companies (blaming them for his porn addiction) and several states (seeking permission to marry his laptop to protest same-sex marriage).

Proponents of porn licensing compare it to excise taxes on cigarettes or alcohol – so-called sin taxes. If the government wants to both raise revenues and reduce the frequency of a certain behavior, it can impose an excise tax on it. And in fact, excise taxes on cigarettes have raised immense revenues for states and reduced demand for tobacco products.

To date, none of the states in which legislation requiring porn viewers to obtain a license has been proposed have enacted it. And that’s a good thing, because imposing porn filters on consumers is a terrible idea.

One reason it’s a terrible idea is that it forces consumers to purchase technology they don’t necessarily want. And manufacturers and suppliers are likely to over-censor content for fear of accidentally failing to identify adult content. Even then, these companies would need to employ an army of human censors to troll through borderline websites.

What’s more, the filters would need to block virtual private networks (VPNs), since they can be used to evade internet censorship. Anyone concerned about hackers or online identity theft would need to pay the porn tax merely to maintain internet security.

But the biggest problem with these proposals is they put us on a slippery slope for further internet censorship. If our internet connections are censored by default for porn, what’s next? For a preview of what could develop, look no further than the sophisticated internet filtering system in China.

China’s government now employs an estimated two million people to monitor and censor the internet. They’re called “internet public opinion analysts.” Their job is to identify and remove objectionable web postings, such as any critique of the government, and to insert hundreds of millions of favorable comments about the Communist Party. The Chinese government has also banned most VPNs.

Is that the future we want to emulate in the US? I think not. Still, I wouldn’t be surprised if at least one or two states enact a porn tax along the lines suggested by Sevier. But I hope they don’t. States shouldn’t use porn as an excuse to quash free choice, free speech, and impose an impossible burden on manufacturers and suppliers of products that connect people to the internet.

Protecting your assets (and yourself) against any threat - from the government, the IRS or a frivolous lawsuit - is something The Nestmann Group has helped more than 15,000 Americans do over the last 30 years.

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About The Author

Since 1990, Mark Nestmann has helped thousands of clients seeking wealth preservation and international tax planning solutions. He is the author of highly acclaimed Lifeboat Strategy and other books & reports dealing with these subjects.

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