In the current climate of economic downturn and fiscal retrenchment, governments, nonprofits, charities, and all sorts of interest groups are seeking positive ways to sustain funding for social goods and services.
Although it’s easy to surrender to a sense of crisis and long emergency, the world’s current money problems have created a context in which proposals for dramatic change are accepted as part of the status quo, rather than risky exceptions. This is an era of upheaval and change, and radical ideas are being proposed in many sectors.
Two prominent and very different examples of experimental, state-based solutions to the social funding conundrum are the Obama administration’s Social Innovation Fund, with its focus on “innovative community-based solutions”, and the Cameron government’s ever-nascent Big Society Bank, which seeks to develop “a sustainable market for social investment.”
Perhaps the best independent example of a new community-funding model for art projects in particular (though the model can be applied to any project) is Kickstarter, which essentially uses the power of individual micro-contributions to make big and small projects possible, without having to submit to the arbitrary will, interests, policies, timing, and inefficiencies of a big organization, or a cadre of powerful individuals.
Canada, as is its wont, is of course paddling along carefully in the arrière-garde in this exciting time. We tend to build dams and slow the flow, preferring the security of the steady pool to the rush of the river; we call out to those forging ahead, suggesting that they slow down and join the rest of us, instead of encouraging them to forge even farther.
So here’s my dam-busting proposal for one big, radical change Canada could make to its traditional social funding model, one I think is appropriate for our times in more ways than one, and hence perhaps achievable:
The Canadian government should institute an ‘Artists Exemption’ on income tax similar to the policy the people of Ireland have enjoyed for the last forty-plus years.
Under this system, the first €40,000 of annual income anyone earns from their works of art is not subject to income tax.
Although the details of how this would work in Canada need to be spelled out, for now I’d just like to give some reasons for implementing an Artists Exemption here.
– Companies get tax deductions for capex because they’re adding to the country’s industrial infrastructure. Since art works are additions to our cultural infrastructure, people who create new works of art should also get tax breaks. They are also many other things, but it is a fact that works of art are material goods produced in Canada that generate revenue, and they deserve the same serious treatment other industries receive, including manufacturing.
– Art makes a big contribution to our national, provincial, and local economies. But there is an inherent cyclicality to the process, which means that an artist might make C$40,000 one year, and then nothing for the next year (or more) while she’s working on her next project. An ‘Artists Exemption’ will effectively smooth out the artist’s income tax contribution over time, better reflecting her average annual income. In a sense it’s just another implementation of conventional deductions for losses, but from the revenue side of things.
– Evidence from Ireland shows that the benefit will go towards those who are poor or who aren’t making a middle-class income. According the Irish Writers Union, “In 2007, 69 per cent of those who benefited from the exemption had incomes of less than €20,000 per annum; 77 per cent had an income of less than €30,000 and 82 per cent had an income of less than €40,000”. This is important in part because it means the benefit to the individual artist and her family will outweigh the relative cost to general tax revenue. (To paraphrase Coleridge, an extra penny in the pocket means more to the poor man than the same penny would mean to the rich man.) It also means that all of her money goes right back into businesses in the local community, since she clearly isn’t making enough money to save or travel. Also, with the security the exemption provides, a highly-skilled artist can devote more of her time to her high-value work, doing more good to the Canadian economy than she would wasting her time at a low-skilled job in order to make ends meet.
– Of course the legislation would include restrictions so that the benefit does not go to very high earning artists (such restrictions are now in place in Ireland).
– For those grumps who generally don’t like artists, let me point out that artists are in a very important sense small business persons. They generally do not have the protections that other ‘workers’ get from being part of large institutions, like a government department or a corporation. Artists may sometimes be shy or in some cases even hypocrites about this, but the fact is that they carry out their business in a highly competitive environment, and they make their money from sales, whether it’s from tickets to the ballet, or the music festival, or their play, or from sales of their books or paintings. Since their business is valuable to the economy but inherently risky, cyclical and independent, they deserve special tax protection.
– Note that the exemption applies to everyone who produces works of art, not just ‘artists’. You don’t need to be elevated to the status of ‘artist’ by any committee panjandrum or be inducted into the self-declared arts conformity in order to benefit; you just need to make art and have a supportive audience.
– Per the previous point, in this form of support for artists, there’s no middleman (except of course the CRA, but they’re always there in any case). The benefit to the artist is linked directly and transparently to the effort she puts into developing an audience or community of supporters. If you can’t find an audience, no harm done; if you can, your audience’s contributions to your work go more directly and completely to you.
– This would largely end the absurdity of forcing artists to pay income tax on the government grants some of them are lucky enough to receive.
There are a number of other benefits an ‘Artists Exemption’ on income tax would bring to Canadians, and to Canadian society. For example, it might help keep more artists in Canada, and it might attract artists from abroad. And it might help some artists get off the sometimes seigneurial, drip-feed life-support of grant-dependency, freeing up funds for other artists.
It’s dishonest to suggest we reduce taxes, or increase funding for government programs, without talking about where the impact will inevitably fall. However, it’s not reasonable to talk about how to handle the impact until we know what that impact will be. That will require a careful study carried out by policymakers. But I suspect that because the benefit of the exemption will accrue largely to people who aren’t making enough money to pay much tax anyway (which magnifies the relative benefit of the exemption in their individual lives), the negative impact to general revenue would be minimal. It would also be offset by the efficiencies gained from freeing up highly-skilled arts workers to devote more of their time to their most value-producing labour. And of course if it does in fact attract artists from abroad, and keeps more artists here, the fiscal benefits would be even greater.
If you think this is a good idea, please use Twitter and Facebook to spread the message. And please send a message to James Moore, Minister of Canadian Heritage and Official Languages by using this contact form. As John Ibbitson at the Globe pointed out recently, the government is looking seriously at all kinds of reforms, and we need to make every opportunity we can to contribute positively to the changes they’re going to make.
The Artists Exemption was recently subject to significant reform in Ireland. Here are some testimonals to its impact.
[Update: Check out this article from the Economist on the contribution US artists make to the national economy.]
[Update: And here’s an interview with National Gallery of Canada director Marc Mayer.]