Some of the Art World’s Largest Donors Have Paid Millions to Squelch a Wealth Tax

A decades-long campaign by the ultra-wealthy, including the Koch, deVos, Mars, Bass, and Walton families, has successfully misinformed United States taxpayers about what the estate tax actually is and who it affects.

The Democratic candidates for the presidency — especially Warren and Sanders — have proposed establishing new “wealth taxes” to address income inequality in the US. This is an important conversation for our country to have, because income inequality is at a five-decade high now in the US, and has insidious effects on the entire population. But these proposals would be difficult to implement, and there’s concern that such taxes might even be subject to a constitutional challenge.

But before we get lost in that debate, I want to reacquaint everyone with the tax we already have on the books that addresses income inequality: the Estate Tax. A decades-long campaign by the ultra-wealthy has successfully confused and misinformed United States taxpayers about what the estate tax actually is and who it affects. Among those families are several of the art world’s biggest patrons, including the Koch, deVos, Mars, Bass, and Walton families.

So what is the estate tax? …read more…

This article first appeared on Hyperallergic on March 13, 2020.

The Insidious Role of Gender Bias in How Artists Grapple with Personal Finances

Our culture is quick to put down a woman who seeks money or power at the same time that it valorizes the men who do so.

When I met Dr. Katherine de Vos Devine at a business retreat we bonded immediately. Both I (an artist and tax expert) and de Vos Devine, an intellectual property expert, art historian, and lawyer who works with artists, counsel clients struggling with the same money issues. Though neither of us is a personal finance expert, we address personal finance issues as professionals who help artists manage their businesses. I see artists repeatedly making the same expensive mistakes that could be avoided with some basic knowledge of personal finance. Furthermore, de Vos Devine and I both encounter women artists who lack confidence due to the pressure of harmful art and gender myths about money.

To open up a conversation about these issues, de Vos Devine and I did some research on a new generation of personal finance books. We discussed the myth of an objective set of rules that a previous generation of (mostly male) writers perpetuated, the emotional power of money, and how personal finance education in the US has shifted to address the self-limiting beliefs of women. We also considered the parallels between the disempowering messages that artists receive about money and those that specifically women receive. The conversation has been edited for length and clarity.

Hannah Cole: What made you dive into this type of personal finance research?

Katherine de Vos Devine: I had a very chaotic childhood, even though there was a lot of privilege. As an adult, I realized I knew nothing about personal finance. I was terrified of it, and I did not want my daughter to grow up feeling as disempowered as I did.

…read more…

This article first appeared on Hyperallergic on September 30, 2019.

Why My Best Clients are the ones Who Used to Live in Financial Chaos

Today I had one of those phone calls that gives my life meaning. I was doing the taxes of a client of mine, I’ll call her Laura, and for the first time in years, she was on top of her taxes, with a big enough refund that we got to talk about personal finance priorities and where to put her money. I had a flashback to a year ago: She had come to me in distress, feeling behind and overwhelmed, with surprise tax bills and no emergency cushion. Laura is a talented musician, who is on tour much of the year, moving house often, and taking in income from lots of different jobs, and without a tracking system so she often got caught off guard with bills and without cash. In short, she had been living in financial chaos. But she knew she didn’t want to live like that forever, and had had enough awful money shocks to commit to changing her situation. She enrolled in my yearlong tax bootcamp program, got her bookkeeping set up, started learning about saving for self-employment tax, and today, she said to me, “Thank you for doing what you do. I love that it will never be this hard again.”

And it crystallized something I’ve been thinking about. A lot of my best clients - the ones who have developed better financial habits, track their expenses, know what they owe and plan for the future - started out in financial chaos. They aren’t born with an intuitive sense of organization or a love for taxes. But it’s the awful experience of being late on bills, surprised by taxes and uncertain how to plan for the future that makes them commit to the work of improving. I say this to encourage the Lauras out there. Financial chaos happens. And in the creative world, for a number of reasons, it happens often. But you can get out of it. And people who know financial chaos are often the ones with the biggest motivation to change it. Mindset matters. Commitment to change matters. These people are my proudest success stories.

I’ve been doing a lot of reading on the habits and mindset that keep people in financial distress, and the tools they can use to get out of it.  Barbara Stanny’s Secrets of Six-Figure Women: Surprising Strategies to Up Your Earnings and Change Your Life is one of these books. I want to share with you my most encouraging takeaway from this book. In parallel to my own client experiences, Stanny’s most stunning finding was that many of the high-earning women she studied used to be in the group she calls “chronic under-earners.” 

In Secrets of Six-Figure Women, Stanny interviews more than 150 women whose annual earnings range from $100,000 to $7 million, finds the traits they possess and identifies a 7-step process they used to increase their incomes. But she also examines a very different group - those women she calls the “under-earners.” And, as Stanny says in the book, “the most surprising finding in my research was that so many six-figure women used to be under-earners.”

I hope you love that as much as I do. It’s so hopeful.

And before I get into her findings, here’s a note about gender. Although this book talks about women, in my experience, artists of any gender absorb very similar attitudes about money and worth. So male artists, this is for you, too.

Ok, back to Stanny’s research. I want to share my favorite piece of the book with you, which is a comparison of these two groups: under-earners and high-earners. And if you see yourself reflected not just in one group, but in both, now you know that that is pretty normal. And if you’re willing to do the work, it’s possible to move from one group to the other.

The 9 Traits of “Under-Earning Women:”

1. A high tolerance for low pay

2. Women underestimate their worth

3. They are willing to work for free

4. They don’t negotiate (ie, they accept what is offered, instead of asking for more)

5. They practice reverse-snobbery (they think badly of wealth and people with it)

6. They believe in the virtue of poverty (they ascribe positive qualities to it)

7. They self-sabotage

8. They are codependent: they put others’ needs unequivocally above their own

9. They live in financial chaos

And here are the 4 traits that all high-earning women possess:

1. A profit motive

2. Audacity: they step out of their comfort zone

3. Resilience: the grit to get up after setbacks

4. Encouragement: relationships that help them

If you want to read the whole book, including the 7 step strategy Stanny identifies to move from under-earner to high-earner, check out the book. It’s a great read.

Tax Policy Should be Part of Our Basic Civic Education

Taxes are our only mandatory civic duty. So why is tax education left out of civics?

You probably recall a school lesson in your past about our “bicameral legislature” or the “separation of powers” between our three branches of government. But did you ever get a lesson in graduated income tax rates, the personal exemption, or how freelancers pay into Social Security?

When the president tries to extract a pledge of loyalty from someone in the Justice Department, an alarm goes off about those “separation of powers,” and as a citizen, you understand a basic tenet of our democracy is being tested. But what about when states propose funding budget shortfalls by increasing the sales tax (which is one of our most regressive taxes), or politicians quietly double the threshold on the estate tax (one of our most powerful tools for fighting the widening wealth gap)? Do these actions trigger the same sense of alarm? …read more…

Translating the New Tax Bill for Small Businesses

“Am I going to benefit from the new business deduction?”

“Do I need to incorporate to take advantage of it?”

These are questions I’m hearing a lot since the passage of the massive new tax bill. Much of the worry centers around some misconceptions. So, I’d like to outline what’s in the new provision, who it affects, and why you likely don’t need to change a thing to benefit.

The most important outcome of the new tax law (officially the Tax Cuts and Jobs Act, or TCJA) was to give a large, permanent tax cut to corporations. The corporate tax rate went from 35% to 21%. Those numbers are a little deceptive, because most US corporations don’t pay nearly that rate once you factor in tax credits and loopholes. A 2016 U.S. Government Accountability Office study found that between 67% and 72% of all active US Corporations between 2006 and 2012 had no tax liability after credits. In fact, the effective corporate tax rate (a much more meaningful number) is closer to 15%. But despite the fact that most corporations don’t pay anything close to the corporate tax rate, the point of the TCJA was largely to cut that rate.

But most businesses in the US are small businesses, not large corporations. In fact, 30.2 million businesses (or 99.9% of US businesses) are small businesses, according to a government-sponsored  2018 US Small Business Administration report. About half the private workforce in the US is employed by small businesses, and more than a quarter of the small businesses are minority-owned. However, the big corporate tax cut rate did not help these businesses at all. So rightfully, Congress introduced a provision into the TCJA to create a little more parity, called the deduction for Qualified Business Income (QBI) (also known as Section 199A). This provision, unlike the corporate tax cuts, is strictly for businesses known as “pass-through entities.” (More on that in a moment.)

But first, here’s what it does: …read more…