Independent contractors such as prostitutes could be taxed

A legislative plan to raise business taxes could increase taxes on independent contractors " prostitutes and newspaper deliverers, for example " who would be subject to the levy.

As lawmakers work out the details, some say contractors will be dropped from a proposal to increase payroll taxes, but left in another plan to increase business license fees. Depending on who gets swept up in the mix, all sorts of contract workers could end up paying higher taxes.

"It's an idea that has solid logic, but at the end of the day becomes problematic," said Jim Wadhams, lobbyist for a broad range of business clients including the Las Vegas Convention and Visitors Authority. "Sometimes you end up catching more than you intended."

Assembly Taxation Chairwoman Kathy McClain, D-Las Vegas, said the question of which independent contractors would be included has complicated decisions on the scope of the tax plans.

"The world's oldest profession?" McClain said with a laugh, when asked whether prostitutes would be included in the expanded tax. "That's part of the problem of putting something new like that in there. Who would it include?"

Loden, 29, a sex worker who declined to give her full name, is an independent contractor at the Moonlight Bunny Ranch east of Carson City, in neighboring Lyon County. She says additional fees or taxes for sex workers would be too expensive.

As a sex worker in a legal brothel, Loden is required by state law to undergo tests for sexually transmitted diseases once a week, costing about $70 each time. She said she gives half her income to the brothel, and still makes over $100,000 a year after the split.

"The thing that aggravates us is that we all pay astronomical fees on what we do health-wise," Loden said. "When you keep slapping on all these additional charges, I just have to say, don't persecute me because I love sex."

Some think increasing taxes on sex workers could force more to go underground and work illegally.

"There's good safety controls to begin with," Loden said. "You're your own boss. You don't have to do anything that you don't want to do."

In previous hearings, brothel lobbyists and sex workers have said they would welcome increased taxes to help solve the state's revenue shortfall. SB369, a bill that died earlier in the session, would have increased the taxes on services provided in brothels, and would have created an ombudsman for the industry that would have worked to improve safety.

"I have to admire (brothel industry lobbyist ) George Flint for getting up there and saying, 'Tax us,'" said Jan Gilbert of the Progressive Leadership Alliance of Nevada. "Why not? Nevada is known for gambling and brothels. I think they're so afraid of the national image. But what happens in Nevada stays in Nevada. Come on!"

Observers say part of the problem with including independent contractors in the payroll tax is that it would be equivalent to an income tax, which is prohibited by the Nevada Constitution.

The Assembly-approved proposal to double business license fees, AB146, would extend those fees to independent contractors. The proposal would double the business license fee from $100 to $200, and add an additional $200 for each additional business location.

Under that provision, a chain such as Starbucks would pay more for its license than independent, single-location coffee shops. But that proposal could be rough on industries such as trucking.

"It would be a huge hit to the trucking industry," said Paul Enos, trucking industry lobbyist. "We're paying tax upon tax."

Dennis Hof of the Moonlight Bunny Ranch said brothels already pay huge business license fees to local governments. He said he pays about $125,000 a year in fees for each of his two locations, both in Lyon County.

"Brothels pay 83 percent of the business license fees in the county," Hof said. "If they're going to put a business license tax on these working girls, all it's going to do is encourage them to work illegally."

Previous proposals to raise taxes on the brothel industry have failed, with some lawmakers saying they didn't want to "legitimize" the industry. Others say the industry, which already pays some taxes, is as legitimate as any other.

"Who decides what's bad and what's not?" Hof said. "You don't see a giant sugar tax on the things that are bad for America. If you don't want sugar, don't allow sugar in the state."