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Oliva: The Art of the Tax Exemption

From Skip Oliva:

The Art of the Tax Exemption

September 21, 2012 § Leave a Comment

On the issue of copyrights and intellectual property, I side with the Stephan Kinsella-Jeffrey Tucker wing of libertarianism that favors abolition of all such state-granted privileges. Aside from the philosophical problems with copyright, the practical case is particularly weak. The American Constitution defended copyright as necessary “to promote the progress of science and useful arts,” but in the 21st century, all it defends is the monopoly profits of large, established entertainment companies.

In June the Parliament of Canada adopted a new copyright law that brings that country’s policies closer to the strict IP regime that exists in the United States. The Conservative Party majority government made no secret of its desire to appease Washington and the business community with its legislation. The leftist opposition parties, the New Democrats (NDP) and Liberals, opposed the new law.

The NDP has a strong constituency among artists and performers. Their position isn’t anti-IP so much as anti-corporate-exploitation-of-IP. During the recent copyright debate NDP members noted, correctly, that few aspects of the new law would inure to the benefit of working artists.

Consequently, an NDP member of parliament has offered a private member’s bill that merits attention. Tyrone Benskin, an actor and director who represents the Quebec riding of Jeanne-Le Ber, introduced the “Reflecting the Realities of Canadian Artists Act” this past May. The bill presently awaits a second reading in the House of Commons. (This type of private member’s bill rarely passes without government support, which is unlikely here.)

The gist of the bill is that “artists” would receive a $10,000 tax deduction for income “derived from royalties, gratuities, or other residual payments from the taxpayer’s artistic activities.” Artists could also average their income over a five-year period for purposes of calculating taxes. This would help those artists whose income fluctuate wildly from year-to-year.

These aren’t new ideas. Indeed, Quebec provides “a deduction for income from copyrights of which you are the first owner” that applies to provincial income taxes. Ireland also exempts the first 40,000 euros “of profits or gains earned by writers, composers, visual artists and sculptors from the sale of their work” from income tax. Several other countries, including Australia and Sweden, permit the sort of tax averaging provided for in Benskin’s bill.

From a strictly libertarian standpoint, any tax exemption is a good tax exemption, as it reduces the amount of private property subject to state confiscation. So the basic idea behind Benskin’s bill is sound. The main problem I have with the bill is that it presents a laundry list of qualifications to be an “artist” entitled to the exemption. While it’s broadly written to cover as many people as possible–it even includes mimes and puppeteers–it essentially puts the government in charge of defining an artist.

There’s also the typical problem with any sort of tax change in that it adds more layers of lawyerly clutter. The provision on income tax averaging is incomprehensible and almost warrants an interpretive dance of some sort. And ultimately, of course, this type of legislation doesn’t address the problem of copyright itself. If anything, it gives artists even more incentive to support state-based intellectual property regimes.

All that said, I think the Benskin bill does provide an intriguing alternative for libertarian IP opponents to offer in their own discussions with utilitarian IP defenders. Instead of stricter copyrights that inevitably benefit the already-wealthy, why not reduce the tax burden of artists–something that will do far more to promote the “progress” of the “useful arts”?

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To the extent possible under law, Stephan Kinsella has waived all copyright and related or neighboring rights to C4SIF. This work is published from: United States. In the event the CC0 license is unenforceable a  Creative Commons License Creative Commons Attribution 3.0 License is hereby granted.