The economics of legalized prostitution (Slightly NSFW)

[Cynic]

My wife and I were talking about books that we could let our kids read when the topic of prostitution came up. While we both agreed that legalized prostitution was a good thing and very necessary, we didn't agree on the fact of whether prostitution in itself was a good thing. But this got me thinking about what the logistics of prostitution and the market around it are.

The first thing that came into my mind was about health and life insurance. Because of the arguments over the last fifteen years about women being denied access to contraceptives and treatment for STDs and similar issues, I was wondering how this impacts legalized prostitution. Since the only legalized brothel in America is the Moonlight Bunny Ranch (NSFW and porn link, just fucking google it if you are interested), I was inclined to check this out. After researching their website, I pretty much found out that there was nothing of real information on the workings of the place. There were videos and picture and products for sale that are de riguer for such sites. But nothing informative. I found a faq that told me about what kind of services were available and about privacy and accomodation. I found out that the Brothel was only a middleman and the prostitutes were freelancers (take the pun as what it is).

I finally bit the bullet and called the Bunny Ranch and was finally transferred to management who gave me a roundabout answer on the availability of medical & life insurance for the Prostitutes. Since they are freelancers, the impetus of getting insurance lies on them rather than on the brothel. The lady on the line told me that they shouldn't have a problem getting whatever services they might need.

Let's go to taxes and deductions. What kind of work related expenses would be covered. Sex toys and clothing -- this seems legitimate. But the same argument that is often used against visual performance artists about the clothes they buy can be used. A living statue performer might buy a hat to use as part of his art but he also uses it as regular wear. In a scenario similar to this, an artist friend who was audited was denied these sort of expenses that cover both work and personal use at the same time. How about deductions for medical procedures that are probably not covered by insurance.

Wild and exaggerated example -- An intersexed (She-male) prostitute realizes that her clientele is quite limited because of who he is. So he (pronoun based upon self-identity of our imagined hero) undergoes a procedure that would make him more accessible to a wider market of clientele. Could we qualify for this as a work deduction? I used to be encouraged to get my teeth bleached and put it down as a work expense because I was a salesman. Would the same principle apply?

There are other concerns that can be raised about the surrounding market of legalized prostitution but I cannot think of any particular question at the moment.

Disclaimer: I suppose one of my curiosities on this subject has made me motivated to maybe call up a few escorts and prostitutes -- plainly for research reasons -- and ask them questions about insurance and taxes and whatever else I can maybe think of. This might make it seem as though that I'm asking you guys to do my homework for me but this topic is primarily a sounding board and morbid curiosity as to what this conversation will (d)evolve into.

~

Cynic

[Ancient History]

http://en.wikipedia.org/wiki/Cathouse:_The_Series

I vaguely recall that like in the porn industry, the focus in the brothel is on not spreading VD more than anything else. So, testing testing testing.

[Neeeek]

One of my 3.5 jobs is working for a tax service, and one of our clients is a stripper. Now, having spoken to her about how the money flows there, which is an absolutely ridiculous and terrifying system, actually figuring out how much they owe in taxes is literally a matter of trying to claim expenses that aren't trackable but are real.

As far as prostitutes go, most of their toys and clothing would be deductible, as most things you'd wear as a pro isn't something you can wear out. Especially if the toys stay at the place of business.

[Josh_Kablack]

I have also worked in tax preparation, and to me it sounds like the Bunny Ranch situation classifies the prostitutes as "independent contractors". Which (under US law) means that each girl is (in the eyes of tax law) her own small business, receives 1099 forms rather than w-2 forms, must file a schedule C, and is responsible for both sides of FICA taxes and so forth.

In theory this sort of arrangement gives each contractor more choice about their work and also more responsibility for themselves -- an independent contractor does not have an employer, instead they have clients, and therefore an independent contractor is usually more able to refuse a job for any given client than an employee is able to refuse to work on a given day. At least in theory.

It's a very common arrangement amongst

• Freelance artists, and writers - who will often contract for a limited amount of art or writing for a set payment.
• Barbers - who often rent a booth within a shop but negotiate appointments, types of services and payments directly with their customers
• A variety of construction and landscaping trades - Plumbers, Electricians, Plasterers, Carpet Installers, Cleaning Services, Landscapers. Where often one licensed and insured contractor will negotiate the cost and specifics of a job with a property owner, and then that contractor will subcontract parts to other skilled tradesmen and general laborers.
• Other fields I'm missing.

In practice the Independent Contractor designation is often used as a way for employers to skimp on providing any sort of benefits or paying into Social Security and Medicare, since the rules for when someone must be an employee are full of grey area and going to court to challenge your employer's mischaracterization is expensive and not likely to improve conditions even if the employee wins. Doubly especially so if the work is in a field that is frowned on socially, such as stripping or prostitution.


Furthermore, aside from the rules about who exactly is an employee being fuzzy, the rules for exactly what can be deducted from income on a Schedule C are subject to a lot of interpretation and change. Most famously the rules over whether Black Leather Pants are allowable business expenses have changed. ( Under more recent rules such things seem to be allowable deductions for employees on Sch A. )

[ModelCitizen]

Since the only legalized brothel in America is the Moonlight Bunny Ranch

There's more than that. According to wikipedia, 28 legal brothels as of 2008.

[Cynic]

Yeah, I realized that after doing more research, ModelCitizen. In this case, your name is quite appropriate.

[Cynic]

So I spent the weekend with a friend who has been a stripper and then a dom at a fetish house. She said she'd find her old spreadsheets to give me a bit of information about what she earned and how she billed. The talk about taxes brought about something interesting. Strippers like prostitutes apparently work as freelancers and only pay a house fee for entrance and extra cash to the DJ for choice music.

Apparently all the strippers and workers at the fetish houses write down entertainer for their profession on official documents and such. Half of the stuff earned was not really written down as it was mostly tips and untraceable.