Paul L. Caron

Thursday, April 2, 2015

How the Tax Code Hurts Artists

New York Times op-ed:  How the Tax Code Hurts Artists, by Amy Sohn (author and television writer):

With tax day looming, you can practically hear the cries of creative professionals across the country. That’s because the tax code hits many right where it hurts, by penalizing them for the distinctive way they make money.

The biggest offender is still the alternative minimum tax, despite the American Taxpayer Relief Act of 2012, which brought long-overdue reform. Two provisions of the AMT hit a disproportionate number of actors, screenwriters and directors: In calculating it, taxpayers can’t deduct employee business expenses, nor can they deduct state, local and property taxes.

Finally, Congress should take a cue from countries like Sweden, Germany and the Netherlands, and allow income averaging for artists — which Congress got rid of in 1986 for everyone but farmers, fishermen and certain retirees.

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The statement in this article that I found most disturbing was this: "In 1986, thanks to lobbying by the entertainment unions, the Internal Revenue Service gave a tax break to performers." Where was the editor? The IRS does not give tax breaks -- Congress does.
I am sympathetic on the AMT point.
The “qualified performing artist” provision, should just be eliminated.
The income averaging point is not too compelling; no reason to expect artists to have especially large fluctuations, and there are good policy reasons to have repealed income averaging. Better to keep rates low and broaden the base.

Posted by: Victor Thuronyi | Apr 2, 2015 10:54:56 AM

Cry me a river

Posted by: Chris Allen | Apr 2, 2015 10:00:01 AM

Your suggestion would make more sense if the more well-heeled of artists, Bono and U2 come readily to mind, didn't exploit every loophole imaginable to reduce their taxes to almost zilch.

And as with Bono, they're often hypocrites, constantly telling the very governments they've underpaid to spend more on their pet causes. I can understand politicians getting fed up with that.

As a struggling writer, I can certainly feel for struggling actors, but any special treatment that artists get should include a cut-off income above which it doesn't apply.

Posted by: Michael W. Perry | Apr 2, 2015 7:59:03 AM