Artists Tax Exemption: is it ethical?

Arcus Arrow

On Saturday the Aosdána General Assembly, which comprises Ireland's leading figures in the creative arts, passed a pointed motion stating that the group "deplores some of the recent tax exemptions granted to the authors of books". It also called for the introduction of new artist tax exemption guidelines that were "in accordance with the spirit of the act".

Up until 2006 the Irish artists' tax exemption scheme was unique in the world for allowing artists to keep every cent of their earnings, though they did pay PRSI. An earnings cap of €250,000 was introduced in 2006 and last December's budget reduced the cap to €125,000.

Regardless of the merit of the work was it ever "ethical" that one section of society were able to earn money tax free? An individual who works at any trade or profession is just as valuable to society as someone who earns their money by writing, painting or sculpture. How can one person be allowed to earn €125 grand tax free while others are struggling to pay their household bills while on PAYE rates?

The Mad Hatter

Edit: In future I'll read the article.

I think the earnings cap needs to be quite high for artists because, frankly, it's bloody hard to make a living in the arts. Especially before you're established, you'll get lucky some years, and other years you won't, and then living off last year's earnings becomes a necessity. I don't know anyone in any trade or profession who could say the same.

If an artist is earning €125k, it's fairly safe to say they're established, and once established, I think that artists should be obliged to pay tax.

MikeC101

Arcus Arrow wrote: »

Regardless of the merit of the work was it ever "ethical" that one section of society were able to earn money tax free? An individual who works at any trade or profession is just as valuable to society as someone who earns their money by writing, painting or sculpture. How can one person be allowed to earn €125 grand tax free while others are struggling to pay their household bills while on PAYE rates?

Where's the A&A angle in this, or have you a link to the full article?

My understanding of the reasoning behind allowing the €125,000 amount is that it can take an artist year and years before they see any kind of return from their work, and if they do see a return it may come in the form of a big chunk of money in a short timeframe.

That's in theory anyway, not sure how applicable it is in practice.

Edit: The Mad Hatter has also pointed out the fact that an artist could very well end up having to live off what money they do make for a long time - and when you consider the rate €125,000 would be taxed at if it was all in one year...

Zillah

Ethical? I dunno. Do I appove? Yes, absolutely.

Making a living as an artist is extremely difficult and we should do everything in our power to make it more feasible. Far too often in our society do we see talented people forced to whore their talents out in various ways because making a living creating actual art (as opposed to radio jingles and other marketing abominations) is virtually impossible.

A stern capitalist would say that if an artist is truly valuable then they should be able to make a living from their work. I say screw you, artistic expression is one of the most valuable things in society and I am more than willing to give artists a break if they're dedicated to creating something beautiful (or unique or provocative etc).

If all we allow to be financially successful are the mundane necessities of society then I say that society is no longer worth sustaining.

I like my arts I do.

Galvasean

A an 'artistic people' I say, DON'T YOU TOUCH MY TAX FREE EARNINGS!!!!!!!!!!!! I've been at this crap a year and have yet to make a cent from it (actually ran up about 2k in debt). Soon I will be in a position to make money from my artistic endevours and I want to keep all of it. One day when I am rich and (quasie) famous I will gladly pay loads and loads of tax, and considerably increase my charity donations. But for now, I (and many like me) am struggling to get by. It will be a while yet before my 'arty' work will give me a sustainable living (the recession aint exactly helping). Low level/aspiring artists need all the help they can get.

Dades

The tax exemption is a great idea but the cap should have been there from the start.

In my previous life as a tax consultant I applied for many exemptions on behalf of clients. Some earned 10,000 pa and some earned millions. Often the "artistic" element was negligible (boybands, anyone?)

So the cap was long overdue to stop the 'unneedy' taking advantage. I believe Mauve Binchy never applied for the tax exemption as she felt it was only fair she pay tax, whereas U2 moved their tax base overseas when the changes came in. Both legal, just differences in attitude.

I did feel disappointed, however, when they capped the exemption. I was hoping to retire on the proceeds of my long-term unfinished novel without handing over half my royalties to the great unwashed.

Galvasean

Oh yes, a cap should have been introduced from day one. What really bugs me is that we now have lobby groups coming after my (as of yet to be earned) earnings because Rich Uncle Bertie got tax exemptions for his memoirs. :mad:

Pete M.

Indeed.
Though one has to first consider if tax and art are ethical in the first instance.

robindch

Arcus Arrow wrote: »

Regardless of the merit of the work was it ever "ethical" that one section of society were able to earn money tax free?

It's there, notionally, to encourage people to produce art -- basically, to add to "Irish culture" in the broadest sense, and that's not a bad thing to do. Royalty payments to patent holders for licensing fees are tax-free too, as an incentive for people to develop and invent new things -- another thing which, in the long term, is probably a good idea for the economy.

I believe that certain companies in the Gaeltacht areas are tax-free (to encourage the Irish language, apparently). And, needless to say, our friends in the religious life are all tax-free, though the benefit to society is unclear to me.

No idea what this has to do with A+A though

bogwalrus

i'm a musician full time/ part time (we play originals so we need jobs to sustain ourselves) and don't make hardly any money. Imro throws our band a few quid every now and then (70 euro right into my account only last week). Were not commercial at all and we do it cause we love what we do, so i think really it should be left alone and maybe only the real commercial artists get some kind of tax like the U2's.


ps. If anyone wants to check out my band (as we need fans ) have a look at the new youtube vid's. i think you might like=) we have a guy playing the Hose now.


http://www.youtube.com/watch?v=snn68J5hdGA


http://www.youtube.com/watch?v=vw35BNl0k3Q

strobe

Galvasean wrote: »

A an 'artistic people' I say, DON'T YOU TOUCH MY TAX FREE EARNINGS!!!!!!!!!!!!

Do you mind if I ask what area of the arts you are in Galvasean?

GLaDOS

strobe wrote: »

Do you mind if I ask what area of the arts you are in Galvasean?

Palaeontology's an art

Zillah

ScienceNerd wrote: »

Palaeontology's an art

Arcus Arrow

The Mad Hatter wrote: »

Edit: In future I'll read the article.

I think the earnings cap needs to be quite high for artists because, frankly, it's bloody hard to make a living in the arts. Especially before you're established, you'll get lucky some years, and other years you won't, and then living off last year's earnings becomes a necessity. I don't know anyone in any trade or profession who could say the same.

If an artist is earning €125k, it's fairly safe to say they're established, and once established, I think that artists should be obliged to pay tax.

No one leaving college no matter what qualifications they have is guaranteed anything. In any job how well you performed this year may well dictate whether you have a job the following year.

The merits of art are debateable since what is and is not art is debateable. If one person indulges themselves writing funny anecdotes and publishes them in a book why should they be allowed to earn 125 grand tax free whereas if a chemist on a twelve month contract earns the same he/she has to pay full tax. The chemist is doing valuable work and it is more rigoursly judged than jokes, painting, or writing chick lit novels.

But the question is still is it ethical for some people to be earning these sums tax free while people who do jobs, not considered artistic, are taxed on much lower sums.

ShumanTheHuman

I don't see why it can't be handled by the tax credit system. You register with the revenue as an artist. You get an artists tax credit of x amount a year, you may carry your unused credit over x amount of years. If you earn over x amount of money by non artistic employment you cannot claim to be an artist and therefore you pay tax on these earnings as normal. This would mean Bertie pays tax as normal, his daughter pays tax over the artistic threshold as would Bono on his royalties and Joe O'Connor, or whoever only publishes once every few years, gets the benefit of a number of years credit.

The Mad Hatter

Arcus Arrow wrote: »

No one leaving college no matter what qualifications they have is guaranteed anything. In any job how well you performed this year may well dictate whether you have a job the following year.

True, but if you don't earn money in the arts for a year, you can't just jump on the dole, as you're self-employed. It's last year's pay or nothing. Self-employed people pay their taxes a year back, and an artist who earns 40k one year and €1500 the next year (it can and does happen - luck of the draw, and has little to do with quantity or quality of output) can't be expected to pay tax on the first year on the earnings of the second.

The merits of art are debateable since what is and is not art is debateable. If one person indulges themselves writing funny anecdotes and publishes them in a book why should they be allowed to earn 125 grand tax free whereas if a chemist on a twelve month contract earns the same he/she has to pay full tax. The chemist is doing valuable work and it is more rigoursly judged than jokes, painting, or writing chick lit novels.

I agree that it's hard to judge whether a work is artistic or not, but I think it's better to catch too many artists than too few. It's easier to earn a living writing funny anecdotes than it is to earn one writing hard literature, and that's why the cap exists in the first place. As has been pointed out earlier, artists' payments tend to come in large lump sums which have to be lived off for a long time, so the lower cap is no good.

Galvasean

strobe wrote: »

Do you mind if I ask what area of the arts you are in Galvasean?

Filmmaking.

Dades

Galvasean wrote: »

Filmmaking.

Jackie Treehorn treats objects like woman, man.

Galvasean

Dades wrote: »

Jackie Treehorn treats objects like woman, man.

robindch

Galvasean wrote: »

Sheesh, I think I've developed Pavlovian reaction - I see a rubber triceratops and I think of ordering a beer

Arcus Arrow

The Mad Hatter wrote: »

True, but if you don't earn money in the arts for a year, you can't just jump on the dole, as you're self-employed. It's last year's pay or nothing. Self-employed people pay their taxes a year back, and an artist who earns 40k one year and €1500 the next year (it can and does happen - luck of the draw, and has little to do with quantity or quality of output) can't be expected to pay tax on the first year on the earnings of the second.

Well the thing is there if a self employed person trying to start a business which has the added prospect of employing people then why should that person be treated less well than an "artist". Even on that score a person involved in painting, sculpting or literature is unlikely to ever create any direct employment.

While an incentive or even a direct subsidy to new artists might be a good idea for, lets say, the first two years out of college I don't see why anything beyond that should be allowed. Even allowing the same conditions for anyone who wants to leave employment to explore the arts might be a good idea. On the other hand allowing a chick lit author or a joke book writer to earn thousands and pay no tax is just loony. Only in this banana republic would you have the likes of multi millionaires like U2 allowed to earn a quarter of a million a year tax free through a scheme that is supposed to encourage the struggling artist. How Berties book could be said to have artistic merit seems particularly nuts when it gets outsold by the life story of a potato crisp.

The Mad Hatter wrote: »

I agree that it's hard to judge whether a work is artistic or not, but I think it's better to catch too many artists than too few. It's easier to earn a living writing funny anecdotes than it is to earn one writing hard literature, and that's why the cap exists in the first place. As has been pointed out earlier, artists' payments tend to come in large lump sums which have to be lived off for a long time, so the lower cap is no good.

I think the same argument can be applied to an entrepreneur. Encouraging entrepreneurs and allowing them to make €10000.00 tax free from a new business might seem like a much more sensible thing to do. But how many people would be up in arms about that?

The cap for artists is hardly realistically encouraging struggling artists since it was €250,000.00 and now it's €10000.00. To produce “art” you don’t need to be making that kind of money. If a person is making €10000.00 they should be paying tax like everyone else.

There was a blasphemy art exhibition a while ago in James Joyce St. One of the exhibits was a thin flag with a skull replacing the head in the papal cross. I offered to buy it: they wanted €1500. That’s tax free I presume.

cavedave

Artists should get a tax exemption if the market does not pay the full value of the externalities they provide. So if they don't get paid much then die and earn everyone else a shed load you can justify subsidising them for economical reasons. Basically if your going to die in poverty no one will do it. If your going to die in poverty then have people walking your tourist trail after your death we should subsidise you. This is apart from all aesthetic/cultural reasons to sponsor you.

So Joyce was an entrepreneur. He set up the Volta cinema and tried to sell Irish tweed in Trieste. Because of him we have loads of tourists wandering round buying things now. Banville, Doyle and loads of people I have never heard of may be on the heritage trail 2060. There are other jobs that have positive externalities that do not get sponsored. Should these be?

ztoical

Arcus Arrow wrote: »

Regardless of the merit of the work was it ever "ethical" that one section of society were able to earn money tax free? An individual who works at any trade or profession is just as valuable to society as someone who earns their money by writing, painting or sculpture. How can one person be allowed to earn €125 grand tax free while others are struggling to pay their household bills while on PAYE rates?

As an artist who has claimed off the artists tax exemption I can say you'll find very very few artists making anywhere near the 125 grand cap plus alot of people don't understand how the exemption scheme works. Just because you sell a piece of work [book, painting, song etc] doesn't mean you can claim any exemption, you have to apply and you have to apply for ever piece you do, you don't just say I'm an artist and get an exemption on everything. It suits writers and song writers more then visual artists as you can submit one book/song for exemption and get tax exemption on all the royalties [in Ireland] from the sale of the book/song so in theory you can collect royalties for years if not more where as as a visual artist you can sell a painting once and that's it. If the person who bought it sells it on at a profit you get nothing from that. For artists at the early to middle stages of their career your not really saving a whole lot. Take last year I sold 6 paintings at one festival for lets say 600euro on average BUT the gallery took a commission of 45% [some take more] on each piece. I could have tired selling them on street to avoid commission but I couldn't sell them for as much on the street and in order to improve my artists cv and make better connections and try and be a better artists I need to be in galleries and making the right connections. With the cost of my studio rent, insurance, equipment, materials, framing and other expenses I'm aiming to break even at this stage [and honestly most of the time not...]. This is typical for most young artists and those are the ones who need the artists tax exemption while the artist earning big bucks are earning over the 125 cap so get thick at the likes of U2 who moved their company to Holland once the cap came in. I earn a living from doing commerical illustration and animation work which does not fall under the artists tax exemption.

I think it's important to support art not because it's the field I work in but because in evolutionary terms one of the biggest moments were we started to become modern humans was when we started telling stories by painting them on caves something Neanderthal man and other extinct members of the homo genus never did. There will always be division over what is art? but I'd rather have argue about that then have no art.

Arcus Arrow

ztoical wrote: »

As an artist who has claimed off the artists tax exemption I can say you'll find very very few artists making anywhere near the 125 grand cap plus alot of people don't understand how the exemption scheme works. Just because you sell a piece of work [book, painting, song etc] doesn't mean you can claim any exemption, you have to apply and you have to apply for ever piece you do, you don't just say I'm an artist and get an exemption on everything.

ztoical wrote: »

It suits writers and song writers more then visual artists as you can submit one book/song for exemption and get tax exemption on all the royalties [in Ireland] from the sale of the book/song so in theory you can collect royalties for years if not more where as as a visual artist you can sell a painting once and that's it.

I've never understood why paintings can't be sold under licence. The artist should get a commission everytime a painting is resold. Paintings held for a certain number of years should be subject to valuation every 10 years and the commission paid on the valuation. One of the great hidden "scams" associated with the art market in Ireland is where wealthy people buy a painting, get it into the national gallery and gain a big tax deduction. That's been going on under the surface for years without most people knowing about it. People who don't know a Rembrandt painting from a Wayne Rooney doodle have been making money while artists are filling out forms for each work they do.

ztoical wrote: »

I think it's important to support art not because it's the field I work in but because in evolutionary terms one of the biggest moments were we started to become modern humans was when we started telling stories by painting them on caves something Neanderthal man and other extinct members of the homo genus never did. There will always be division over what is art? but I'd rather have argue about that then have no art.

I think the same argument could be made for mathematicians or philosophers or historians to claim special treatment under the tax laws.

Overall what might be a good idea in theory has gotten totally screwed up by the gombeen men who run the country. People like multi millionaire members of U2, second rate comedy writers, double pension politicians and fluff novel writers claiming tax exemptions, just makes a farce of the whole thing. The way it's run at the moment I don't think it could be called "ethical".

It's also to some extent a reflection of who makes the laws and for whom they make them.

cypharius

I think that yes, Artists should have tax exemption(Bearing in mind that would still pay something like 22% vat) up until a certain point of earning, but I think that if the government gives artists exemption, that scientists too should have some exemption of some sort.

Dades

We also need deregulation.

That way anyone who wants to can be an artist.

ztoical

cypharius wrote: »

I think that yes, Artists should have tax exemption(Bearing in mind that would still pay something like 22% vat) up until a certain point of earning, but I think that if the government gives artists exemption, that scientists too should have some exemption of some sort.

Well farmers get much bigger subsidies then artists could ever hope to but taking the example of scientists what should they get exemption for? The artists tax exemption is only on the profits from the sale of artistic creations it doesn't give any exemption for anything else. If a scientists creates/invents something new should he/she get tax exemption? Perhaps but one could argue there has been alot of grants and tax breaks given to business and companies that employ the scientist to come up with their big ideas while the majority of artists are self employed.

ztoical

Galvasean wrote: »

Filmmaking.

Hate to break it to you hon but film doesn't fall under the artists tax exemption scheme....there are different tax incentives out there to encourage film production but most are in relation to bringing foreign film makers to Ireland. There are of course the grants and other schemes through the irish film board but it's in need of a major overhaul in how they allocate the grants.

Galvasean

ztoical wrote: »

Hate to break it to you hon but film doesn't fall under the artists tax exemption scheme....there are different tax incentives out there to encourage film production but most are in relation to bringing foreign film makers to Ireland. There are of course the grants and other schemes through the irish film board but it's in need of a major overhaul in how they allocate the grants.

Oooh, d ge me started on those other and schemes... (another rant altogether)

Arcus Arrow

Galvasean wrote: »

Oooh, d ge me started on those other and schemes... (another rant altogether)

Do I have this right: if a average hack writes a book of 100 popular Irish Jokes or Berties daughter writes some bubble gum love story, they have to apply for the exemption on that book and after that the royalties come under the tax exemption year after year? On the other hand an artist has to apply for each painting, gets the exemption once and thats it until they sell another painting or piece of work? In the meantime their work can be resold time after time for a profit and the artist gets zero?

Dades

You apply for Artist's Exemption for each "artistic work" on a tax year basis - and within the tax year in question. That can be for a painting or a book. The exemption applies for that year only.

I'm not sure if they have loopholes to stop people splitting royalty payments over two tax years.

I made at least one 'single' AE claim for an artist that covered their whole body of work sold for a year. (I don't see what happens regarding the paintings after they are first sold has to do with anything, however).

Arcus Arrow

Dades wrote: »

You apply for Artist's Exemption for each "artistic work" on a tax year basis - and within the tax year in question. That can be for a painting or a book. The exemption applies for that year only.

I'm not sure if they have loopholes to stop people splitting royalty payments over two tax years.

I made at least one 'single' AE claim for an artist that covered their whole body of work sold for a year. (I don't see what happens regarding the paintings after they are first sold has to do with anything, however).

I think up to 2007 the exemption was on all income. The point about the paintings is this: an artist should be as entitled to earn royalties just as much as a hack who writes a joke book or a pulp fiction novel. If they changed the law that way and taxed artists like everybody else it might be of a lot more use to genuine artists. How much tax have U2 gotten away with? A great painting should be just as valued as a catch pop tune.

Dades

How income from a painting is earned has nothing to do with the Revenue Commissioners. It's a completely different 'product' to a pop song or a book. It's value derives from it's individuality - hence you can't subject it to some sort of royalty system.