What implications does the new GOP tax bill have for working artists?
Today an opaque and as yet mostly unread GOP tax bill is hurtling towards the President’s desk. The media have mostly avoided a close look at the collective effects of the tax bill—the near-inevitable cuts to public services and national infrastructure that will affect all of us—and instead my feeds have been dripping for days with straightforward “ways to make the new tax bill work for you,” including a cynical guide to “hacking the tax plan” that promises to help you learn “ways to profit off the Republican tax bill.” A number of these pieces give the reader helpful hints on ways to turn themselves into business entities, as though setting up an LLC is something like getting a new set of business cards printed—do I go with a friendly diminutive like “Allie”, or the more formal “Alison”?—rather than a meaningful legal commitment with significant costs and responsibilities.
At the moment, it looks like artists’ abilities to end next year in the black will be tied up with one provision in particular: standardized deductions will double, but those who don’t file a Schedule C or set up a pass-through entity will lose the ability to deduct work-related expenses, a change that could hit performing artists especially hard. Musicians, dancers, and actors with steady gigs are often categorized as employees and receive W-2s; now it seems they’ll no longer be able to itemize and deduct expenses related to getting and doing those jobs, though most artists spend a significant proportion of their incomes on the costs of doing business (think: transportation costs; headshots; agents’ commissions; a dancer’s weekly supply of pointe shoes; that $19,000 tuba at the back of the orchestra and the extra $1,000 for the wheeled case its player needs to get it to work). Well, you might ask, why not just file a Schedule C? It’s not that easy, though.
It looks like artists’ abilities to end next year in the black will be tied up with one provision in particular: some artists may lose the ability to deduct work-related expenses.
A couple of years ago I spoke with Venus DeMars, an artist and musician from Minnesota, for the first time. She called after midnight from her sister’s backyard up on the North Shore. I wanted to talk to her about an audit she was going through with the state tax authorities; I had heard it was something more than a simple mismatch between receipts. She called me late, after playing a concert, and told me her story—out of breath, pacing in the dark. Venus hadn't held a day job in ten years, and she’d made about $30,000 from her artwork the year before the audit—not a lot, but more than enough to get by. For more than a decade she had worked with an accountant to file a Schedule C each year, an itemization of profits and losses that small businesspeople in the United States file along with their personal income taxes. With that Schedule C, she and twenty-three million other self-employed workers in the US are able to write off business expenses, everything from tubes of paint to computer software. For a lot of people, those deductions make doing business possible. But that year, the Minnesota Department of Revenue ruled Venus to be, officially, a hobbyist.
At the end of our conversation, I posed a silly question, though I already knew the answer: Wasn’t the worst-case scenario just a change in tax status, maybe a little bit of money to pay back? What did it matter? Her voice caught. “It feels like it’s discrediting me as a person,” she said, “and just throwing my twenty-year career out the window. Saying, ‘you were just playing the whole time.’ You put your heart and soul out on the line because that’s what touches people. And then they tell you that everything you’re doing is just pretend. It can crush you.
The IRS and the state Departments of Revenue that use their guidelines say that in order to qualify as a business for tax purposes, the taxpayer must show a “profit motive.” But motives and intentions are tough to prove. Artists have an especially hard time showing that the primary purpose of their activities is income, given that generations of artists have been taught to act as though they make art for love, not money. The truth—that love and money are deeply interconnected in occupational artistic practice—is something that artists can acknowledge in interaction, but it’s too complicated for public consumption. A distance from filthy lucre, then, is a normal part of the pose of the professional artist. And that is how a bad rule becomes potentially devastating. An entire generation of economic sociologists writing after Vivianna Zelizer has shown, again and again, that economic life doesn’t have to pit value against values. Love and money, so obviously intertwined for professional artists, are inexorably linked for the rest of us as well. But not everyone is on board just yet.
Artists have an especially hard time showing that the primary purpose of their activities is income, given that generations of artists have been taught to act as though they make art for love, not money.
When the Minnesota Department of Revenue issued a final determination reclassifying Venus as a hobbyist, they sent her a long document explaining why. One section read, “The presence of personal motives in carrying on of an activity may indicate that the activity is not engaged in for profit.” Underneath, bullet points outlined evidence against her. In just a few words, the auditor’s letter called into question a centuries-old understanding of art as an expression of the artist’s soul. He recast an aesthetic choice (and savvy brand-building strategy) as a black mark on Venus’s record, and relied on the myth of money as the antithesis of love to discredit her. The first point of evidence read simply: “The music and art are self-created by the taxpayer and based on his [sic] life experience and perspective, and are intensely personal.” I’ve seen those exact words cut-and-pasted into other audit documents—apparently they function within the agency as a comprehensive dismissal of an artist’s claims of professionalism, serious intent, and profit motive. “The art is self-created by the taxpayer and based on her life experience and perspective, and is intensely personal.”
Sometimes the line between professional and amateur is a clear, bright one. But in the United States, artists are, for the most part, just artists, moving in and out of day jobs and commercial work, employment and unemployment, windfall and drought. Professional artist, serious artist, working artist, real artist—around here, these are fighting words. They mean so much in part because we don’t agree—can’t agree—on what they mean. In fact, we prefer not to agree, and for our uncertainties we are rewarded with a rich and vibrant cultural life. There are no clear definitions, and absent the occasional obscenity or copyright trial, there are no authorities to enforce the boundaries.
The state Departments of Revenue and the Internal Revenue Service end up being, somehow, the only mechanisms the state has to determine an artist’s status with any finality. But they do it with opaque rules that rely on an outmoded distinction between “commercial art” and “art for art’s sake” that can’t help us to understand artists who are serious about their calling—who do it for love and for money. If our tax policy is going to continue to push artists to adopt highly regulated business structures, then our tax agencies need to revise their rules to offer a clear and transparent vision of the “profit motive,” and should ensure that artists aren’t unfairly disadvantaged by the dualistic vision of artistic practice that those agencies have clung to for far too long.
This post has been adapted from Chapter 7 of The Work of Art: Value in Creative Careers by Alison Gerber.