Harper government says no to tax fairness for artists
by Michael Wheeler
Yesterday, Bill C-427 came up for second reading in Parliament. A private member’s bill proposed by the NDP’s Tyrone Benskin (previous Artistic Director of Montreal’s Black Theatre Workshop), Bill C-427 was an Act to amend the Income Tax Act to allow income averaging for artists.
These changes were “designed by neutral tax experts at the Library of Parliament to achieve the desired tax fairness for artists and cultural entrepreneurs.” It failed 142 to 121. All of the votes against it were by Conservative MPs, including Heritage Minister James Moore.
The tax codes in Britain, Germany, The Netherlands and France have all made similar adjustments to encourage cultural production by independent producers. Corporate tax rates has been lowered by one third (22% to 15%) since Harper took power. Certainly cultural tax rates could be amended to reflect a level playing field. Unfortunately the Conservative Government couldn’t appreciate the value of a tax code that allowed entrepreneurs in cultural industries to be taxed at competitive rates with international trading partners and competitors.
From Benkin’s website:
WHY IS BILL C-427 NECESSARY
Due to the irregular hours and inconsistent incomes frequently associated with their work, artists are nearly always disadvantaged both by punitively high taxation during years of high earning and by virtue of their ineligibility for a number of Federal programs such as Employment Insurance (EI), the Canada Pension Plan (CPP) and others. C-427 will begin to level the playing field by allowing them to average their income over an elective period, achieving considerable tax savings over two to five years.
The critique of the Bill was presented in a recent Globe and Mail op-ed by Kevin Milligan, which levels three charges against income averaging: 1) Last time we tried it was complicated. 2) Last time there were more tax brackets. 3) Last time tax rates were higher.
These reasons not to act to support Canadian culture through a fair tax structure, frankly, are awful. They can be summarized by two statements: “Why do you guys want to make everything so complicated?” and “Come on guys, it’s not so bad.” None of these standards are applied to corporate interests in the myriad of ways they have been accommodated and caressed by the government. They are not particularly compelling as arguments go either: Even meagre savings, when you are living on the poverty-level income of many artists, would be significant.
When the Minister was asked if he would support the bill for Second Reading yesterday, he said he would not. Moore listed new museums, programs and a recent visit by members of The Canadian Arts Coalition as signs the government was doing a great job with culture. He did not address at any time the financial realities of being an artist or the particulars of the bill, preferring to recite the institutionally-based initiatives he controls the funding for. He did not address why the government won’t support a tax system that allows our cultural workers to compete on a level playing field.
If the Harper Government doesn’t want to work to support culture and the economic paradigm that defines it, that’s cool. We kind of knew it all along. Let’s not pretend this was a decision made out of anything but partisan interest however. This bill would have made a major impact on the viability of being an artist in Canada. It begs the question whether culture not tied to The War of 1812, or the major institutions it controls, is something this government wants to encourage.
You can follow Michael on Twitter at @michaelcwheeler
Small update to this piece.
A) The Minister, upon reading this post, tweeted it was, “Embarrassing “analysis””.
We responded asking him to elaborate further in this space, but so far no comment. At first I though he meant it was embarrassing, as in I got my facts wrong or missed something. As time passes I am also making room for the possibility he is actually just embarrassed and doesn’t want to talk about it.
B) While that was happening – it occurred to me that this is a good example of why electoral reform is desperately needed in Canada. The Greens, NDPers and Liberals all arrived at the same “embarrassing” conclusion and voted for the bill. As parties they represent 63% of Canadians who voted in the last election, while the Conservatives representing 37% of voters were able to stop this legislation. That’s not democracy – that’s being outmanoeuvred in an anachronistic system.
[…] at Praxis, Michael Wheeler has written a column criticizing the Harper government for not supporting an NDP private member’s bill that would […]
Hey I encourage anyone reading this to read Rob Salerno’s rebuttal to this piece linked above. I don’t agree, but it is written in the spirit of debate that we hope this space will engender so check it out and make up your own mind.
While the news presented in this post is distressing I do think it’s pretty cool that a former Artistic Director is now a member of Parliament. I actually find that kind of reassuring. Even if the motion did get voted down.
That dude @ “Is Income Averaging “Tax Fairness for Artists” sounds like a whiny-baby that’s defending not helping artists because they “live on Government grants” and he as a journalist wouldn’t get the same “deal”. He takes an example of someone making no money to $200,000 in one year, which is not the overall reality, norm or intention of people producing art. There are certain things that make life interesting and livable and which shape our culture, and which should be supported whole-heartedly; theatre, film, music fit in that category, carping criticism by journalists I could live without.
Ben – I don’t agree! I think the tone of Rob’s piece manages NOT to be too self-serving, which is part of why I encouraged reading it. I think the most compelling part of his critique revolves around what is and is not considered “artistic” by the government and how that would be recognized.
Journalism used to be a profession you could make a living at – we”ll see how these paywalls do – but the odds of making a living at it have fallen to artist-like standards. It’s all theoretical now because the bill is dead, but it would have been a major issue in how this legislation was crafted.
I have to say I’m sorry that this Bill didn’t pass second reading. Attempts to address the difficulties faced by freelance artists in making a living by MPs are rare. While there are difficulties with Bill C427 (some pointed out by Rob Salerno), sending the Bill to committee, which is only possible if it passes second reading, allows analysis and debate on how to improve the Bill.
One point not noted except by Tyrone, is that freelance artists can not access the social benefits that their taxes pay for. What’s fair about that?
Great point about artist non-access to programs funded by their taxes Lucy. Maybe artists should adopt the license plates used in The District of Columbia:
You know, I agree that sending it to committee for further study might have been useful — if only to get all the facts and bugs out in the air. But to address some of the points raised here:
Journalism as an art: Not only are the working conditions of (many if not most) journalists similar to artists, but their outputs are similar, at least in so far as shaping the Canadian cultural landscape and informing, educating, and, yes, entertaining Canadians. Longer-form journalism is often literary. Journalists often publish books, or appear on television programs or in films (even when portraying themselves). Also, since the act seems to allow everyone who appears on screen to call themselves an artist, Peter Mansbridge would count but freelance reporter Jonathan Goldsbie wouldn’t (nor would Kelly Nestruck, come to think of it). I posit that Goldsbie contributes at least as much to the Canadian Cultural landscape as The Comedy Network’s new edition of Match Game. (Goldsbie is the perfect example, by the way, of new journalism moving to an indie arts model. More and more young journalists are not following internships to staff jobs, but instead spending their days reporting on Twitter or for unpaid web sites, hoping to eventually get noticed and land enough freelance piecework to make a living.)
(I’m not even sure that jounalists are excluded from the act, because the language is a bit confusing — the fact that it’s unclear what counts as “artist income” and who counts as an “artist” should be biggest drawbacks on this bill).
But then there’s everyone else who’s excluded. Many would argue athletes have a similar impact on Canadian culture and storytelling (or that they’re at least as important to Canadian culture as, say, Hiccups and Dan For Mayor). Athletes also earn marginal and volatile incomes. Should they be protected as well?
I know that the $0-$200K example is extreme, but really, the people who will benefit most are the most successful artists under this scheme. Quite frankly, Carly Rae Jepsen can afford the taxes she currently owes.
And I’m not implying that artists are lazy sponges for government money. I’m acknowledging that they get government benefits, so they should pay into the government when they’re able. Just like every other person who has a volatile income.
(Need another example of why this was unfair? Say you’re a contractor who earns $60,000/year, but has to take three years off because of a disability. When that contractor returns to work, he doesn’t get to average his income over the three years when he couldn’t work.)
My opinion is that if we’re going to allow income averaging, it has to be an “everyone or no one” option, or else it’s ripe for abuse and charges that it’s unfair.
PS. Artists typically can’t access EI because they *don’t* pay into it. EI is funded through its own premiums, not general revenue. Self-employed people can now elect to pay into EI and the qualify to receive it when necessary (although I’ve never attempted to do so. Has anyone written about how artists can use EI?). Artists can access EI if they pay into it from their day job but then lose that job (either because they were fired/laid off, or because they left that job for another job but then lost that job).
It does suck to pay CPP twice (because just like all other self-employed people we pay the employer share), but those costs are also deducted from our taxable amounts, and they help ensure we can access CPP later in life.
Artists can still access provincial welfare, and — assuming it still exists then — Old Age Security when we turn 67.
And then there’s the whole gamut of other services the government provides that we enjoy, beyond grants — police, fire department, schools, roads, transit, defence, embassies, parks, community centres, etc. So we’re not completely shut out of the government services that we’re being taxed for.
You make some good points. What is distinctive about many artists, and this by the way is where Richard Florida drives me crazy, is that there are many artistic activities are not driven by profit. Putting on an indie play, making a sculpture, writing a poem, etc. None of the merits of these activities are even judged by how much money they make. The people that do these things live in a capitalist economy – still have to eat food and pay rent and stuff – so income averaging is a tool to encourage these activities.
The Goldsbie example is great one to illuminate the issues sending the bill to committee would have to address. Franco Boni and i programmed his work (as a performance artist?) when he created his project Route 501 for The FreeFall Festival at The Theatre Centre. The hybrid nature of much of our work these days would have been a challenge for this legislation, but never mind cause the bill is in fact dead.
Although C427 did not pass I must say it is really encouraging to see this kind of respectful and well-constructed debate taking place over the topic. I would have been overjoyed to see it discussed further on the hill but the fact that these topics are being brought up at all gives me hope as a young artist and advocate that these issues will continue to come forth in debate and that we can work toward solutions that work for all and allow art and culture to flourish in Canada. Thank you all for your passionate words.
I think the fatal flaw with this bill is trying to define “artist” at all. There are too many factors that make “artist” difficult to define (level of professionalism, output, years of (in)activity, recognition, barriers created by external factors that can prevent recognition, and the value of non-professional art*).
But the bigger problem is one of actual fairness. If you think the tax system is unfair for one class of people with volatile incomes, then it’s unfair for *all* people with volatile incomes, whether they’re artists or entrepreneurs or contractors or pensioners.
(One of the things I hate about this bill is that it’s pulling an Orwellian/Harper trick with its name. It’s not about “Income averaging for artists” or “Helping artists” or even “Raising artists’ after-tax incomes.” By calling it “Tax Fairness for Artists” it automatically frames the debate in terms of people being for or against “fairness” rather that the actual elements of the bill. That doesn’t inspire open and honest debate, as you can see in every part of the post above, especially its title.)
Even if I agree that artists deserve special treatment, I find it hard to see this as the major obstacle to artistic expression and income security you do. The relief can only — by definition — kick in once an artist earns at least $41,000 in a year. The relief is marginal until the artist earns significantly more than that (about $70 for every $1000 that the artist manages to shift to a lower income year). The relief comes in the artist’s high-earning years instead of in their low-earning years. The relief does nothing to improve job prospects or audience interest in the arts.
*(Although, I’d say, if you’re not going to be a professional artist, ie, you’re not basing your income on art, then you shouldn’t need income relief in the form of tax grants for professionals in the sense that you’re discussing it here…)
I have a big challenge ahead of me not the least bit related to Artists but totally unjust and don’t know how to get Correction so here goes.
I am low income now separated from 18 year marriage to very wealthy man. In Alberta in 2012 I can file my Income tax as Single, but at Federal Level, I have to take my ex-s income (huge and he did no, none whatsoever sharing in 18 years while he accumulated millions for himself and first family), I have to take His income onto my puny one and I lose my Federal Tax Credits for 2012 and 2013? and such because Alberta and Canada have completely different criteria for stating: Separated.
This is not fair not only to me, low income all these years, wife so I was paying my own CPP so his companies didn’t have to, and now I have no severance, no CPP yet, no EI, no severance package, no income since his companies were my only clients, and I have to carry the likes of Millionaires and not just me but every other low income separated less than 365 days consecutively at separate addresses?
Can someone please look in to this ASAP because I have already lost so many benefits just because I married the guy in the first place. First mistake. One of Many. Any suggestions that help solve the problem, that help! really, I would welcome some help for a change. Thank you so much for reading this.
Why waste money on art, when we can invest in the MILITARY?
Those holy lands don’t bomb themselves… you know, eh?