Thursday, September 24, 2009

Regressive Taxation

Fight the Arts Tax!

4 comments:

  1. I'm sympathetic to lawmakers levying unpopular taxes in times of crisis, but this ain't the way to do it.

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  2. You asked for it.

    I'm sort of agnostic on this one, but I'd like to throw out a few questions.

    1. Does it change anything if you think of the policy as the lifting of a current tax exemption rather than the imposition of a new tax? The comparison to sports and movies at https://www.philaculture.org/action/hottopics/6019/just-facts-new-tax-slams-nonprofit-arts-culture is a little misleading since those events are already subject to the 6% sales tax. In a sense this would "single out" the arts, but it would do so by revoking the arts' previously preferential treatment.

    2. A tax exemption is a form of indirect state funding. Where should the arts stand in the list of public spending priorities in the face of severe budgetary pressures and cuts in areas like health and education?

    3. The article at http://www.philaculture.org/action/hottopics/5916/state-balances-budget-backs-arts-organizations states that, "[t]he tax is likely to have a devastating effect on cultural organizations." I am not at all familiar with the business of holding arts events. But is a 6% sales tax really likely to have that significant of an effect? If, as the article at https://www.philaculture.org/action/hottopics/6019/just-facts-new-tax-slams-nonprofit-arts-culture states, the average ticket costs $14, then it would give rise to a tax liability of $0.84 per ticket. If we're talking about a family outing of four, then it becomes $3.36 (from $56 to $59.36). Do we really think that arts event-goers will be that sensitive price changes of this magnitude?

    Just throwing it out there.

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  3. I hear you Ryan, these are tough decisions and it forces cultural organizations to state their intrinsic value, which on the face of it, isn't such a bad exercise.

    That said, it's a dire time for the arts and cultural community, and we're not just talking about the opera house here. Many of the sites affected are historical sites whose mission is to engage and educate its visitors, not to mention the various community outreach programs and partnerships with schools and neighborhood organizations these sites often oversee.

    In many ways the tax exemption already has been hypothetically lifted because funding sources have dried up. With respect to sports and entertainment, we already know that you can soak sports events attendees. If Phils tickets jump another $5 fan will still pack the place. I'm not sure museums can withstand that test, no matter how minimal the price increase.

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  4. That's fair. As long as we are obsessively taxophobic and blow a zillion dollars on the military and prisons, we're gonna have way more worthy causes than funds to support them. It's always going to be extremely tough to decide what valuable program should be underfunded less.

    But on the topic of price sensitivity - 300% Birds tax? We could provide every student in Philadelphia with their very own life-size replica of Michelangelo's David.

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