2002 No Action
2001 No Action
2000 No Action
1998 No Action
1995 No Action
August 7, 1996
TO THE HONORABLE, THE SENATE:
In accordance with the provisions of Section 43-1-4 of the General Laws, I am transmitting herewith, with my disapproval, 96-S-3026, Substitute A, "An Act Relating to Personal Income Tax Ñ Exemption for Writers, Composers and Artists."
This Act would create a new state income tax exemption for writers, composers, and artists residing within a denned Arts and Entertainment District within the City of Providence. The exemption would appear to apply under the Act only to income generated while the taxpayer is a resident of the District from a "one-of-a-kind, limited" production of a book, play, musical composition, painting, dance, film, or other art form.
The intent of this legislation Ñ to revitalize a designated area of Downtown Providence by attracting artists to live and work in the area Ñ is laudable. The enhancement and improvement of this arts and entertainment area is important to developing Providence as an attractive tourist and convention destination. I cannot agree however with the means of using this specialized tax exemption for a particular professional group living in a denned area of one municipality.
The exemption contained in the this legislation promises to be very difficult to administer. In order to quality for the exemption, the taxpayer must demonstrate (and the Tax Division must determine) residency, professional status as an artist, the character of the work as "one-of-a-kind" or "limited," and the net profit or gain attributable to the work. Moreover, the Act appears to require that the taxpayer derive the "income exempted from within said district while a resident of said zone." This requirement is likely to present difficult issues as to where income is derived when an art object is sold or a production is performed outside of the designated district.
Perhaps more importantly, the Act presents bad precedent. The legislation confers a special personal income tax exemption on a specific occupational group living in a defined area within a single municipality. One could reasonably anticipate future municipal requests for special personal income tax exemptions for other designated zones or other targeted groups.
The state income tax revenue to be lost as a result of the Act is not determinable at the present time, but could be significant to the extent the new exemption would apply to substantial income already taxed by the State.
Finally, the income tax exemption created by this Act would result in a fundamental inequity between similarly situated taxpayers. Artists living within the District would be treated much more favorably than artists earning the same income but living elsewhere. Similarly, artists within the District would gain more favorable treatment than non-artists living in the same area.
For the foregoing reasons, I disapprove of this legislation and respectfully urge your support of this veto.