Tearing Down the American Dream: How American Tax Law Has Failed Creativity

From President Obama’s speech on Intellectual Property:

“We’re going to aggressively protect our intellectual property. Our single greatest asset is the innovation and the ingenuity and creativity of the American people…It is essential to our prosperity and it will only become more so in this century.”

While I know that his speech was in regards to Intellectual Property Rights, with such a bold declaration on the part of President Obama, it comes to my mind that part of protecting the innovation and creativity of the American people comes in offering them some protection from the government, as well.  Namely, protection in tax classification.

Why is there no separate governance for those involved in the creative arts, such as artistry, music, writing, and invention?  These are career fields which more often post high losses long before they post any significant income.  Among authors, the current statistic to post even moderate income (barring a fluke runaway success) is an average of about ten years.  For many, however, this is an optimistic figure at best, and they can go much longer before finally getting to the point where their writing turns more profit than they put out in expenses.

For artists, the window can be even longer.  For singers and musicians, it’s about the same “magic window.”  And inventors can literally spend hundreds of thousands of dollars in development of ideas that never actually make it onto the shelves, before they finally hit on something that is marketable.

Authors, artists, and musicians who aren’t already making big money are often responsible for between 75-100% of their total advertising costs.  They’re also responsible for the costs of any research required in the production of their art, the transportation costs of getting said art to whatever destination it may be showed at, or contracted, with not even a promise that it will indeed be shown or contracted.  They are responsible for all costs of getting their name/brand out to the businesses that might be interested in carrying or producing their works, and for all other expenses incurred in pre-contract/sale as well as many of the aspects of post-contract/sale.  They can rack up literally thousands of dollars in debt, all focused on the belief that their art will one day turn a profit, and all with the belief that they are, in fact, operating a business.  They’re certainly doing much more work than many people who operate “traditional” businesses put into their own businesses.

Yet, the IRS and government want to consign these overworked, often struggling souls, who work long hours at jobs they seldom enjoy, just to pay living expenses and the expenses of their true careers, and who put in even longer hours pounding paths over and over in the hope of getting that elusive contract, to the category of “hobbyist” if they can’t manage to turn a profit for three out of any five years.  They can’t be involved in a real business if they’re not turning a profit, according the government.

It is a mockery of the American Dream, of the ideal of being able to make something of yourself from nothing, to call people who are pouring so much of themselves into a dream they firmly believe to be a business venture, nothing more than tinkering hobbyists.  It cheapens the whole experience of being an American, and makes the ideals for which this country was supposedly founded fail the litmus test for creating successes from ashes.

My challenge to the government of the United States, its taxing agencies, and to each and every American citizen, is to combat this inequity.

To the people, it is time to stand up, and demand that the government re-examine and revise current tax laws, removing artists, artisans, inventors and published authors from the IRC 183 clause of tax law, making all arts and inventions that can be substantiated with evidence of business endeavors to be considered a “for-profit” business, no matter the length of time it takes them to actually turn a profit.

To the Lawmakers and the IRS, I issue this challenge: Support innovation, creativity, and ingenuity — the building blocks of our great nation.  Give artists, artisans, authors, and inventors protection under tax laws, so that they can continue to create, without the costly interruptions of such ridiculous clauses as IRC 183.  Having to deal with the audit processes and headaches involved in the current reading of this particular tax law stunts the flow of creativity, and could make the next great American author or artist give up long before they ever reach their potential.  I challenge you to remember that some of the greatest artists and inventors of all time were largely unknown and uncelebrated in their own lifetimes.  But had they been forced to give up their art due to ridiculous taxation laws that could so easily be amended, we might never have Van Goethe or Da Vinci to admire today, or had Beowulf or King Arthur to read about.

It’s time to stop minimalizing people who are fighting with their every breath for a dream that props up the foundation of the American Dream to which we all aspire.


An Author’s Thoughts on Piracy and Intellectual Property Theft

If there’s one thing I’m certain of, it’s that this post is probably going to get me all sorts of gripes from the “free information” minded people out there.  But it’s something I feel really needs said, because too many people don’t take the time, anymore, to think about the impact of what they’re doing, either on other people or, ultimately, on themselves.

Recently, I posted this Status Update on Facebook:

“I would like to ask the entire working populace of the world to work for free, for the next year.
No? You don’t want to do that? You have bills to pay and can’t afford to work for nothing?
Think about that the next time you download a pirated book… That book took time to research, time to write, time to design the cover, edit, and publish. When you pirate, you’re telling all those people they have to work for free, because YOU want something for nothing… the author, the editor, the publisher, the cover artist… And you’re stealing from their families, as well – time those people COULD have spent with children or spouses, or parents and siblings. Money they could use to pay for food, utilities, their home, maybe even necessary healthcare for an ailing loved one.
It’s NOT a victimless crime, and most people involved in the production of that book don’t even make enough to survive on, from its sales.”

The words are true, and I’d like to expand on them, here.

People who pirate books, music, etc and the people who download said pirated items, never stop to think of the impact.  They’re quick to declare what they’re doing “victimless” and “not a crime.”

Let me lay out some details and facts for you.

Yes, pirating intellectual property IS a crime.  Most of the world’s nations have some kind of laws that govern what is and is not considered protected material – but works of fiction that are still within the author’s lifetime+70 years are considered intellectual property, and protected, by most governments.  Same goes for music (although I’ll personally claim ignorance of the actual time duration, I know that it is AT LEAST the length of the artist’s natural life). In many cases, these laws equally cover things such as computer programs and games.  What does this mean?   It means that if you’re downloading a whole book or album from a website in which you have NOT made a ROYALTY-INCLUSIVE payment for the product, you CAN be fined or go to jail.  It means that I, as the author of a book, CAN press charges against you for theft if you sell, distribute, or acquire one of my books without either paying for the privilege in a way that means I receive my legally-protected royalty,  or through a means by which I, as the author, have given you a copy, personally.

And, lest you believe that your crime is “victimless”…

Most people who pirate work under the assumption that all authors, recording artists, etc make oodles and oodles of money, and “will never miss” the royalties said party is pirating.  Truth?

Wake up and smell the cyber-coffee.  You’re living in a delusion.

The VAST MAJORITY of authors and recording artists are struggling.  Maybe they work a day job, just to pay the bills, or maybe they’ve had to sacrifice the steady income in order to pursue their dreams.  In either case, most of them (myself included) are just scraping by.  We don’t have a NY Times Bestseller (I won’t even go into what goes into getting one of those) or a Billboard-topping single. Most barely make (if they make at all) their bills every month, and the expenses of doing what we love (writing, music, etc) more often than not outweigh the royalties we bring in.  We don’t have health insurance unless either (A) we happen to be lucky enough to have a day job that comes with benefits or (B) we purchase it ourselves.  We don’t get a retirement fund.  Most authors and musicians don’t stop until they die (and many are still in the midst of yet another project when they do).  We don’t get tax breaks, benefits, scholarships, grants, or any other benefit from what we do except the royalties we collect, and the love of the art.

Unlike most people, who leave work behind when they leave for the evening, writers, artists, and musicians are never “off the clock.”  We never stop working.  If we hold a normal job during the day, we often leave from that, go home, and start immediately working on our current project.  Our families and friends often suffer for our art as much as we do – they don’t get to spend the time with us, because we always have to be working on yet another project.  In this business, slowing down is the kiss of death for any hope of a career.  We miss out on a lot of events and holidays because we’re neck-deep in a deadline.

We spend literally hundreds of hours (up to 3 years, a piece) on each book/album/etc.  If you figured that out at just roughly $6/hour (which is below minimum wage in most places in the US, these days), the time alone that goes into just an author’s portion of a book (the research, writing, and doing edits required by the editor) can equal, at the absolute bottom (if by some miracle they managed to pull off a book-a-month, which I’ve personally yet to be able to figure out), roughly $1500 per month spent working on the book.  Most authors aren’t likely to even clear $500 in their first month of sales on a book.  And that’s just time spent.  It doesn’t include any research resources, travel expenses that might be incurred in research, or any marketing that has to be developed or done, pre-release.

Now, when you figure in the time the editor spends editing, and their pay scale (which, when you’re talking small press, is peanuts, really), the cover art, and the various publishing costs that go into producing even an e-book, then the $6 or so you might spend to purchase the book really isn’t anywhere NEAR the amount that’s gone into creating it.

So, say 500 people decide to download the book from a pirate site.  No money goes to the publisher… ergo, no money goes to the author, either.  Let’s take that 500 people, and multiply it by a cover price of $6.  That’s $3000… TWICE the monthly input of the author alone, and just in time alone, by our calculation above.  Still think it’s a victimless crime?  Or that the author won’t miss those royalties?

I’ve heard people try to claim that they “love” a certain author or his/her work.  Yet they will only download the books from pirate sites.  What you’re really doing is telling the author you think they’re not worth your time or money to support properly.  Ergo, you’re contributing to the author eventually not being able to write as many books, because they have to find some other way of supporting themselves and their families.

You wouldn’t walk into a grocery store and demand your groceries for free.  You wouldn’t walk into a department store and expect to get away with walking out with a cartload of items without paying for them.  Those are products someone spent the time and money to develop and present.  The same goes for books and music.  Not only do they take time and money to create, but they also require something that the items you buy in the  store DON’T require – they require the artist to put his/her heart and soul into the crafting.  How is it okay to steal that?

I can hear the people griping about how they can’t afford to spend money on books.

You have options other than stealing.

Visit your local library.  Not only does your patronage there assure the continuation of the library system, and the jobs of the people who work there, but libraries PAY for the books they lend out.  Everyone who should get a cut of the price of that book does, and yet you still get to read it for free. You just can’t KEEP it.

Frequent publisher boards and pages.  Often, larger publishers will have special “free read” deals, and smaller ones will run regular sales where you can find your favorite author’s books at steep discounts.  Both are handled legitimately.

Or, approach the author directly.  Most authors have websites, these days.  Many of them have e-mail addresses where you can contact them.  Write to an author whose work you really admire and want to read more of, and explain your situation.  Authors are people, too, and they know what it’s like to struggle.  Many times, they’ll be only too happy to send you a copy of their book in exchange for nothing more than a brief review or rating on places like Amazon or GoodReads after you’re finished.  And this way, you’re getting the book from the author directly, and it’s a GIFT.  The only thing with this process that I’ll add is, be respectful.  If an author sends you a free copy in exchange for a review or rating, GIVE the review or rating as promised, and do NOT give out or distribute the copy you receive to other people (doing so makes YOU a pirate).

Remember, if you’re downloading it for free, you’re probably not the only one.  And if that happens enough, it ends up hurting YOU, as well, because the authors will eventually just stop writing — wouldn’t you stop working, if you weren’t getting paid for it?