Wait, people pay for porn?
LOS ANGELES - California state lawmakers are considering an unusual idea to solve the state's huge budget shortfall: Tax pornography. Labels: economic news, government, money, porn
The idea was proposed by a state assemblyman, and would impose a 25 percent tax on the production and sales of pornographic videos -- the vast majority of which are made in southern California.
It is unknown, however, how seriously lawmakers will take the idea or how the porn business would deal with the new tax. It is likely, though, that porm-makers would simply pass the cost along to consumers by making pornographic materials more expensive.
However, many economists believe that pornography is an industry with inelastic demand -- meaning market conditions typically don't affect consumers' desire for the product. In other words, it is believed that most porn consumers would continue to buy regardless of how much it cost.
A potential economic downside to the tax proposal is that porn producers could leave California to manufacture and distribute videos in other states that don't impose the tax.
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