Last year, as the world watched the euro ride the wave of the economic collapse, the European Union updated their economic policies. In order to raise their GDP, they included “shadowy business” when measuring their revenue. Shadowy businesses are everything from prostitution, arms trading and drugs, to counterfeit cigarettes and human trafficking.[i]
In 2002, Germany’s legislature made prostitution legal – the buying and selling of sex, brothels, and pimping – are taxed and regulated like any business. When Amsterdam opened its red light district, it brought in $100 million dollars per year.[ii] The biggest GDP swell is now happening in Germany, at an annual growth rate of 1.6%, (the equivalent of 3 years growth[iii]) A chunk of that may attribute to the fact that Germany’s prostitution industry is now worth $18 billion euros a year.
It’s no big surprise that prostitution is one of the world’s most lucrative businesses.
Havoscope, a source for black market statistics, report profits from the prostitution industry in America generate $40 million a day.[iv]
A simplistic sum— $40,000,000.00 x 365 days a year = $14,600,000,000.00
Why does $14.6 billion dollars a year continue to go untaxed in America? Because it’s coming from the prostitution industry, and in America, legislating morality is an issue.
I am still trying to figure out why. Some say the ‘oldest profession in the book’ is risky. It sends women back to cave man days and keeps them on the wrong side of gender equality. However, I choose that career path, and I’ve never looked back. Nearly a decade ago I willingly made the choice to rent out my body and my time, for money. I took my college degree off the wall, tucked away my career, and shut down my business. I graduated from escorting to running an escort agency. Both times I added zero’s behind the numbers on my tax returns. That’s how much my income increased. I’m still happy I made that decision. Was it a risky business? Not enough to make me stop. Was I contributing to the immorality of America? Not any more than most 20-something year olds in the 21st century are doing.
Apparently morality and risk only matters when it comes to sex. Construction workers put their body in danger every single day, but it’s okay, because it’s “morally sound”. What about bankers, stock brokers, credit financiers, the ones who caused the latest economic meltdown in 2008, the Great Depression of 1929, and the collapse of the New York Stock Exchange in 1909. How sound are their morals?
Prostitutes prostitute. Construction workers construct. Wall street moguls do wall street things.
How much money is that again?
Yes, that is right. The prostitution tax in America is coming in at zero dollars, even in the counties in Nevada where prostitution is legal – brothels do not pay taxes – no entertainment tax, no state tax. Just a business license and a health fee.[i] I will note that an individual working for a Nevada brothel just one week per month has an average annual income of nearly $100,000, of which more than $20,000 is calculated as the federal income tax.
Right now, since most prostitution is against the law, it remains on the black market. Which means, $40 million dollars a day aren’t contributing to society, even though those of us in the prostitution industry still drive on our roads, send our children to school, and visit public libraries and parks. We still consume America’s perks.
What revenue could be made by taxing prostitution?
First, let us separate prostitution by choice, and prostitution from sex trafficking. Based on prostitution research, 60% of prostitution is trafficked. That leaves 40% who are not trafficked.
We’ll rework our simplistic sum (this time with 20% coming in as federal income taxes).
What could be done if only 20% of this revenue was taxed?
Let’s look at this pie chart in annual numbers.
What is currently being spent by the feds to combat prostitution?
Unfortunately, the only study I could find was conducted in the mid 1980’s, from a university student. Twenty years ago, each prostitution arrest cost the state $2,000, and courtesy of Havoscope it takes at least 5 officers to conduct a prostitution sting in the US.
Legislation exists to regulate the airline and tourism industry, why not for the sex industry?
Instead of lumping fees together, Spirit Airlines conveniently lays them out for the consumer.
Of course, taxing prostitution means we would have to legalize prostitution – and doesn’t legalization promote human trafficking?
Reports show that legalized prostitution leads to an expansion of the prostitution market. Germany and the Netherlands have repeatedly ranked among the five worst black spots for human sex trafficking and a lot of people are arguing that the best way to reduce demand for trafficking is to reduce demand for prostitution.
We can all agree that human trafficking needs to be tackled. One way of addressing trafficking is to spend more money combatting it, and one way of getting that money is by taxing it.
We could learn from the problems Europe faced in moving forward.
“Prostitution has reached intolerable levels here,” says Saarbrücken’s (a town in Germany) mayor, Charlotte Britz. There are at least 100 brothels in the city and she walks past five in the ten minutes it takes to get from the train station to her office. Their garish hoardings look strikingly out of place in the pretty cobbled streets. Residents complain about used condoms littering the bus stops their children use to go to school. “I am not OK with that,” she says.
Perhaps one solution is to designate an area, as Nevada has done with brothels. You go to an airport to fly, you go to a grocery store to buy food, you go to a brothel for sex. Of course, not everyone wants to have standard issue grocery store sex, that’s where courtesans and sugar babies come in.
At the same time, there is evidence that legalizing prostitution helps reduce violence against sex workers. Five years after it decriminalized adult prostitution, New Zealand had no increases in trafficking or the number of sex workers. Others argue that the legalization of prostitution will improve working and safety conditions for sex workers, allowing sex businesses to recruit among domestic women who choose prostitution as their free choice of occupation. This, in turn, makes resorting to trafficked women less attractive.
Another potential hindrance to legalizing and taxing prostitution is those in the industry will actually have to identify with being involved in it, and in Germany only 44 women have actually done so.
Not everyone wants “I was a whore for 5 years” on their resume.
Passing legislature means prostitutes have to sign up to engage in the taxing movement. But one way around that is to not only tax the prostitutes, but tax the business, the agency, and the brothel. If taxes came through the company, and not the prostitute, the stigma wouldn’t be as big a problem.
Of course, all this analysis relies on figures, and in the black market there are no concrete figures to pull from.
The EU’s new methods of including shadowy activities may be used solely to inflate the nations deficit, but bringing those activities out of the shadows does make some economic sense.
Since Germany made buying and selling sex legal in 2002, in 2 years, prostitution climbed to a $6-billion-euro industry. Now, 13 years later, it’s an $18-billion-euro industry. That is 15,683,320,000.00 US Dollars. $15 billion dollars is no laughing matter. Just ask Volkswagen, it’s about what they’re going to end up paying just to cover their EPA emissions fine.
So, why is America throwing away $40 million dollars a day? Because it’s coming from the prostitution industry. Germany doesn’t have a problem recognizing the spare change in their back pocket. For them, prostitution is not a moral issue. It’s an economic stimulus. Maybe they can take some of that spare change to bail Volkswagen out of their latest economic blunder.
 Gunter, Joel and Clissitt, Ben. 2013. Telegraph Media Group, Ltd. “Welcome to Paradise.” Web. Accessed Nov. 2015.
 Cho, Seo-Young; Dreher, Axel; Neumayer, Eric. 2013. “Does Legalized Prostitution Increase Human Trafficking?” (Bureau of the Dutch National Rapporteur on Trafficking, 2005 and Segrave, 2009. Web. Accessed Nov. 2015.
[ii] Let’s say that 20% of those not trafficked actually paid taxes.
[i] Freiss, Steve. 2009. New York Times, “Nevada brothels want to pay tax, but state says no.” Jan 2009. Web. Accessed Nov. 2015.
[ii] Prostitution’s Hierarchy of Coercion. 2008. ProstitutionResearch.com. 2015. Web. Accessed Nov. 2015.
[i] Wenkel, Rolf. Deutsche Welle, “German GDP swells on sex, drugs, and weapons”. Aug. 2014. Web. Accessed Nov 2015.
[ii] Simons, Marlise. The New York Times, “Amsterdam Tries Upscale Fix for Red-Light District Crime”. Feb. 2008. Web. Accessed Nov 2015.
[iii] Trading Economics, Germany Economic Indicators, Web. Nov. 2015. Accessed Nov. 2015.ngn c. 2013. “ed Nov. 2015. tually signed up. cessedave spend in a full decade. y ‘oNYC each year. Ther Acccessed Nov. 2015. http://www.tradingeconomics.com/germany/indicators
[iv] Havoscope: Global Black Market Information. Prostitution Statistics. 2015. Web. Accessed Nov. 2015. And Anne Rasmusson, “Commercial Sexual Exploitation of Children: A Literature Review,” The alliance for Speaking Truths on Prostitution and the Center for Urban and Regional Affairs, June 1, 1999.