Saturday, February 07, 2009

On the Proposed Broadway Tax

I think the upset over the governor's proposed tax on Broadway tickets signifies a certain quality of doublespeak and doublethink on the part of commercial producers. Yes, we fully understand that whenever you tax, you discourage consumption. Just to get everyone up to speed, the Times coverage of the testimony by a small group of high-powered Broadway folk boiled down what is currently being proposed to this succinct paragraph:

Mr. Paterson has proposed a 4 percent state tax on commercial theater tickets; if it is approved, an additional 4 percent tax would be automatically imposed by New York City, as well as a 0.375 percent Metropolitan Transportation Authority tax. For a Broadway orchestra seat that goes for $120 — a fairly common price at major productions — the tax would add $10.
In light of the stratospheric price of Broadway tickets -- something noted by Assemblyman Herman D. Farrell (whose son, Herman Daniel Farrell III is a noted playwright and also an acquaintance of mine) -- how facile, it seems, for Rocco Landesman, president of Jujamcyn Theaters, to employ these quotes:

“With the ongoing demise of the financial sector, policy makers must fight to nurture and protect industries, such as Broadway, that have been proven to generate tourist dollars.”

“I ask you to also recognize the dire consequences this tax proposal may have on the hard-working men and women employed by Broadway, as well as the thousands of other businesses that rely on Broadway spending."
Understand: I'm not questioning whether Broadway generates tourist dollars, because we know it does. And I'm not questioning whether the tax may have a negative effect on production and thus have a negative effect on employment. I am questioning whether this argument has been used before in other forms and proven a rhetorical bugaboo. For example, if any of the unions win in their demands for higher salaries and benefits, commercial Broadway said, it would have a negative impact on production and force higher ticket prices. Yet here's Landesman participating in a Q&A in the Times, published on January 18, 2008.

Q: What was the purpose behind the $20 million strike fund that the producers have been accumulating over the last 4 years? Presumably, it was established to keep the shows running during a strike — which didn’t happen.

A: If all of the producers’ requests had been granted during the IATSE negotiations, resulting in lowering expenses for the producers, would ticket prices have been reduced? They would have stabilized. That in itself is progress.
So ticket prices will only go up, not down, Landesman says. Thus, back in the context of the current situation, may we not deduce that there is no incentive to reconsider the tax?

Let me allow Landesman's quote in the more recent Times piece to speak for itself:

After the hearing, Mr. Landesman said that theater owners and producers were “going to have to look hard at our cost structure” and try to find ways to lower ticket prices to make theater more accessible to financially strained New Yorkers and tourists.
Yes, that's just what Broadway may have to do. Let's also note that when Assemblyman Richard L. Brodsky, who the Times describes as "an avid theatergoer," says "Broadway had not received the sort of public assistance that sports teams have enjoyed" or "the kind of public subsidies and private contributions that helped support many ballet companies and orchestras nationwide," there's a tiny bit of sophistry at work, one the Times elects, perhaps understandably, not to explore.

I feel that when you have a system by which dollar values are assigned to air rights above theaters such that the owners of those theaters (who are, let's remember, regular investors in commercial productions) can generate and have indeed generated substantial sums by selling those rights to real estate developers, that is additional income. True, it's additional income relating to privately owned land and property. But it is a privileged system that the public has a limited amount of say over -- people can show up to Community Board meetings to protest this or that overpriced condominium that in the fullness of time has turned Midtown West into one of the ugliest architectural messes this side of Calcutta, but clearly they hold very little sway over the decision-makers, and all of those air-rights sales, with all the income it has generated, has never led to a "stabilization" in ticket prices, much less a lowering of them. It's not so much a gaming of the air-rights system as a system that favors fatcats like Landesman and leaves the residents of Midtown West -- and I don't mean the millionaire condo owners -- with the fabric of their neighborhood fundamentally destroyed.

And doesn't anyone remember the Broadway Initiative, in which ticket prices for new plays would be subsidized by part of the interest generated on the money made by the sale of those aforementioned air rights? Whatever happened to that?

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