Tax Deduction Ban for Biased Clubs Gets OK

SACRAMENTO — Legislation barring state tax deductions for business expenses at private clubs that discriminate against women and minorities was narrowly passed Thursday by the Assembly.

A bipartisan 55-15 vote, one more than the required two-thirds majority, sent the measure to the Senate where its chances of passage were rated as “fairly good” by Senate President Pro Tem David A. Roberti (D-Los Angeles).

Forty-one Democrats and 14 Republicans voted yes on the bill, sponsored by Assemblywoman Gwen Moore (D-Los Angeles). All 15 no votes were cast by GOP members.

It was the first time in the state’s history that such an anti-discrimination bill has passed either house of the Legislature.

The legislation would write into law regulations recently adopted by the Franchise Tax Board, which are still subject to review by the Office of Administrative Law.

Moore said she felt that writing the anti-discrimination restrictions into state law would give them greater force than regulatory action by the Franchise Tax Board.

Women, Minorities Barred

“For too long,” Moore told her colleagues, “women and minorities have been pushed away from the tables where business is conducted, and careers and contacts are made.

“Added to their injury has been the insult of having to help pay for the aversions of private clubs and their members.”

Noting that the bill does not prevent private clubs from continuing to do “business as usual” if they so desire, Moore added, “it simply says that you and I do not have to pay for discriminatory practices through the taxing policies of the state.”

The bill would prohibit tax deductions for business expenses incurred at a private club that discriminates in either membership or services on the basis of age, sex, race, religion, color, ancestry or national origin.

Any private club with restricted membership or services, and licensed by the Department of Alcoholic Beverage Control, would have to state on receipts that expenditures were nondeductible for state income tax purposes.

Violations would be grounds for ABC liquor license suspensions or revocations.

After the Assembly vote, Roberti said, “It is one of those ideas whose time has come, when you combine the people who feel strongly on the issue and the pragmatists.”

A spokesman for Gov. George Deukmejian said he has no position on the bill.

In the past, however, Deukmejian has been cool to the anti-discrimination legislation. He has said that government should not intrude on the right of private clubs to select their members and questioned the Franchise Tax Board’s legal authority to adopt the regulations.

Opposition Quiet

There was virtually no opposition expressed to the Moore bill during the Assembly debate.

One opponent, Assemblyman Phillip D. Wyman (R-Tehachapi), said he felt that the bill was unconstitutional because he interpreted it to mean that it would prohibit religious clubs from limiting their membership to persons of the same faith.

Asked afterwards about the lack of opposition speeches, Moore said, “People did not want to speak against the bill because it would be perceived as speaking in favor of discrimination.”

A supporter, Assemblyman Johan Klehs (D-San Leandro), said, “The state should not subsidize sexism, racism or any other form of discrimination.”

A candidate for mayor of San Francisco, Democratic Assemblyman Art Agnos, said incumbent Mayor Dianne Feinstein and Board of Supervisors President Nancy Walker recently went to a private club to conduct some business and had to enter through a side door because the front door was reserved for male members.

‘Jim Crow Policies’

“That’s wrong,” Agnos said. “That’s wrong for the taxpayers of our state to subsidize those kind of discriminatory and Jim Crow policies.”

Arguing that private clubs exclude about 70% of the population for membership for various reasons, Assemblyman Terry B. Friedman (D-Tarzana) said, “Why in the world should we subsidize clubs that don’t even allow a majority of our citizens to join?”