Workers with cash-in-hand jobs are often subject to stigma where it is suggested that they don’t pay their taxes like everyone else. When your earnings aren’t going through the bank, it’s much harder for anyone to prove how much you earned and to catch you out for not declaring the entirety of your income. In-person sex workers are typically paid in cash and it’s common for people to make the accusation that sex workers don’t pay taxes and for them to argue that the industry should be highly regulated to make certain that they do.
Harsh regulations on sex work do not make it easier for sex workers to pay taxes, of course. A highly regulated sex industry results in a small number of workers who are able to follow the restrictions and who pay taxes in the same manner as those engaged in traditional wage labour, but everyone else who is independently selling sex is now in a precarious situation where declaring their income means admitting to criminal activity. In this way, regulating sex work specifically discourages most sex workers from paying their taxes. Complete criminalization of prostitution means everyone who sells sex is discourage from paying their taxes. Only the full decriminalization of sex work allows sex workers to pay tax without any concerns about being punished for doing so.
One difficulty that sex workers often face with declaring their income is that paying large sums of money into the bank often requires an explanation. Admitting to a bank teller that you are a prostitute is fairly likely to get you discriminated against, even in places where selling sex is not illegal. For sex workers who do have some parts of their work criminalized, like those who work in illegal or unlicensed brothels, speaking openly about how they earned their money carries the possibility of getting them into legal trouble. Lying about having a different type of cash-in-hand job can work if you’re confident enough to pull it off, but a lot of people don’t want to take the risk.
Another issue for declaring income is that a lot of sex workers don’t understand how the system works in the first place. People don’t tend to start selling sex with a business plan. A person who starts seeing clients out of a desperate need for money isn’t going to have time to look up how being self-employed works or keep track of their earnings so that they can calculate how much tax they owe. If you don’t know what the threshold is to have to declare your self-employed income and you’re barely getting by on how much you earn, learning how to file taxes isn’t going to be your first priority.
Plenty of sex workers are earning a very small amount in the first place. This can mean they don’t actually owe any tax, or that they can’t reasonably afford to pay it. In the UK, where we have a threshold of how much we must earn before we have to pay national insurance and a higher threshold than that for income tax, a large number of sex workers simply never earn enough from selling sex to need to pay tax on it at all. Other countries don’t offer a personal allowance in this way, which leaves people in poverty who are earning a very small income to choose between paying the tax they owe or affording basic necessities.
There are methods to overcome many of these issues. A lot of sex workers will claim to be entertainers or have another story in mind for why their earnings are in cash and they will split up their irregular income into similar chunks when paying it into the bank. Those who were not educated on how to file their own taxes when they started selling sex will put in work to teach themselves. It is not that these barriers cannot be surmounted, it’s that they’re barriers the average worker often doesn’t have to face and that will cause a trend.
People who complain about sex workers not paying their taxes are usually mistaken about the reasons some sex workers do not pay them, and also overestimate the scale of the issue. The amount that sex workers earn is dwarfed by the total amount of money given out in tips to workers across a number of industries that goes undeclared and untaxed. That amount is rendered insignificant itself when compared to the amount of tax that is dodged by large corporations. Yet the vitriol directed at sex workers is immense.
Despite the extra work required for sex workers to pay their taxes, many make sure to file them correctly and declare all of their income anyway… at which point they have to deal with being unable to declare certain work expenses, either because they had to lie about what job they do or because the tax authority is unwilling to view sex toys and Uber trips as being work expenses.
Within countries where prostitution is fully decriminalized, once we resolve the impacts of stigma and poverty, sex workers can and will pay their taxes as readily as any other person. As things stand, a government which criminalizes a group and mistreats them cannot reasonably expect those same people to go out of their way to pay them money. The way the public suddenly involve themselves in the personal finances of others when it comes to sex workers is because of their bigotry rather than genuine concern over the issue.
Similar to the racist “Welfare Queen” concept, sex workers who are poor and may rely on government benefits or who might try to fundraise are considered to be scammers who game the system for their benefit. Based on knowing an individual sex worker’s hourly rate people will wildly speculate about how much they earn per month or year and convince themselves that the appearance of living in poverty is merely an act. The idea that sex workers are getting excessive government support considering how much they earn from prostitution is laughable when we recognize that a lack of government support is frequently one of the driving factors causing people to sell sex. Black and brown sex workers, as well as immigrants of most backgrounds, face these kind of bigoted assumptions twice over.
Before we talk about prostitution and taxes, we need to think about the welfare of sex workers. I am personally far more concerned that a person is able to feed themselves than I am with whether they’ve declared every penny of their income. The idea of a sex worker keeping all of their earnings in cash and never declaring it disturbs me far less than imagining them being arrested for their honesty. I don’t want to see immigrants deported for selling sex in another country who get caught because they tried to pay income tax. The claim that sex workers are tax-dodgers is a distraction from these concerns.
Anyway, I’m about to get a head-start on categorizing all my earnings and work expenses for when I file my next self-employed tax return.
Jack Talks About Sex Work 