What Justifies Tax Exemption for Inaccessible Arts and Culture?

If you are into the arts, you should download Arts & Economic Prosperity 6 (AEP6), a new study put out by Americans for the Arts.  The study measures and then touts the economic impact of nonprofit arts organization nationwide and locally in 375 different locations.  Americans for the Arts takes a different approach than most who support tax exemptions for orchestras and expensive art houses.  Most people justify tax exemption for arts and culture qualitatively.  They say the organizations are invariably good for a community’s soul. 

Americans for the Arts group justifies support for the arts quantitatively, by the measuring the economic impact — jobs, audience spending, etc. —  arts and cultural organizations have on economies.  The organization makes the argument, implicitly at least, that arts and culture is good for business and, on that basis, ought to be tax exempt.  And if that rationale is true, I suppose it might justify tax exemption for museums and orchestras that are hardly accessible except to those with money, and sometimes lots of it.  The substantial economic impact eventually trickles down to the poor, I suppose.  A trickle down theory of tax exemption.  Anyway, here is an excerpt from the study:

What is Arts & Economic Prosperity 6?

The newly released Arts & Economic Prosperity 6 (AEP6) is an economic and social impact study of the nation’s nonprofit arts and culture industry. Building on its 30-year legacy as the largest and most inclusive study of its kind, AEP6 provides detailed findings on 373 regions from across all 50 states and Puerto Rico—ranging in population from 4,000 to 4 million—and representing rural, suburban, and large urban communities.

In 2022, nonprofit arts and culture organizations and their audiences generated $151.7 billion in economic activity—$73.3 billion in spending by the organizations, which leveraged an additional $78.4 billion in event-related spending by their audiences. The impact of this economic activity is far reaching, supporting 2.6 million jobs, generating $29.1 billion in tax revenue, and providing $101 billion in personal income to residents. AEP6 sends a strong signal that when we support the arts, we are investing in both economic and community well-being.

The problem I have with economic impact arguments is that for-profits, too, have economic impact but we don’t exempt them from taxation.  I am not sure economic impact arguments distinguish nonprofits from for-profits.  I am sure that idea is not my own but I can’t remember whose scholarship made that point a long time ago.

darryll k. jones