Research and development in culture : a case for cross subsidies in the arts

Several types of arguments advocate state involvement in the promotion of culture. Many of them imply some sort of subsidy, usually to non-for-profit firms; none favors taxing cultural events. The tax literature, on the other side, discusses excise taxation on culture only as a way to redistribute income. However, to the extent that culture is a public good, taxing it is undesirable. Why are then excise taxes on public events extant in many countries? This paper argues that the development of profitable artists is analogous to R&D in the industrial organization literature, and that the excise taxation of public cultural events may be part of an efficient policy to fund it. Using a Stackelberg game to model the investment to develop an artist, I find that the optimal tax is a multiple of the expected surplus created by the artist that cannot be appropriated by the investor who funds her, and that progressivity plays a limited role at most.

• Autores: Jaramillo Herrera, Christian Rafael
• Tipo de recurso: Work document
• Fecha de publicación: 2009
• Institución: Universidad de los Andes
• Repositorio: Séneca: repositorio Uniandes
• Idioma: eng
• OAI Identifier: oai:repositorio.uniandes.edu.co:1992/8093
• Acceso en línea: http://hdl.handle.net/1992/8093
• Palabra clave: Excise taxes; Cross subsidies; Art; Culture; Public policy; Artist development; Impuestos - Política gubernamental; Arte - Impuestos; Impuestos sobre el patrimonio - Investigaciones; H23, H50, Z11
• Rights: openAccess
• License: http://creativecommons.org/licenses/by-nc-nd/4.0/