Open Letter to City Council Regarding Proposed Admissions Tax

Open Letter to City Council Regarding Proposed Admissions Tax

Casey McCarty

Aug 20th, 2018

The Idea Foundry supports public funding for the arts, however, legislation proposed by the Greater Columbus Arts Council (GCAC) will be detrimental to hundreds of small businesses. We propose exemptions and clarifications to the language of this bill.  Learn More about the proposed Ticket Fee HERE and read the full proposal HERE.

An open letter to the Columbus City Council follows:

Council Members,

Legislation proposed by GCAC, proposed to become effective January 2019, contains broad and encompassing language that would impose a new 7% sales tax on every “admission event” including workshops, classes, and educational programs. It also includes a taxation on “any memberships involving any admission benefits.”

No language as yet provides for any exemptions for small businesses, and no exemption currently exists for educational programming by private or non-profit organizations.

The unintended consequences of this tax is a considerable detriment to the Idea Foundry’s ability to serve our more than 800 members, including over 400 Columbus-based small business owners.

Our programming is predominantly training that is not typically available to adults who are not enrolled in degree-seeking college programs, such as the safe handling of woodworking, welding, CNC machining, 3D printing and other technology; as well as functional arts, small business basics, and entrepreneurship skills building.  Hundreds of lifelong learning students, including those who attend programs that typically serve impoverished neighborhood youth or their teachers, would be taxed for the privilege of attending programming for the purpose of education and training on tools and technology that is often vital to their future economic success.

Taxing memberships that provide “any admission benefits” is overly vague, but since we regularly provide complimentary access to lectures or workshops for members, we have to assume our memberships would fall under this new tax, even though admission benefits is not the sole or even primary purpose for our membership dues, which mainly serve to provide access to our space and equipment.

We would either have to reduce the amenities and resources we offer to members, or the price of a standard coworking membership, for example, would increase nearly the equivalent of one month’s dues.  Those members would stand to be taxed twice--once for membership and again whenever they attended paid classes or workshops here to advance their business skills.

Taxing our memberships and programming would represent a brand new tax liability of at least $50,000 (based on 2018 figures) with very little notice.  Even if we are successfully able to pass on most of this cost to our customers, this limits our ability to grow and to address our own expense inflation and adds many new costs associated with compliance. The heaviest of the compliance lifts being that this tax is to be self-managed, which means that the Idea Foundry would be responsible for the posting, collection, and remittance of these taxes (presumably) on an annual basis. Given the implications in other cities that have already implemented such taxes, even accidentally mismanaging collections can lead to significant penalties above and beyond the tax itself.

We are requesting that the language of the law make reasonable exemptions that would protect small businesses and education-oriented facilities from this new tax burden:

  • Exempt small businesses (such as those grossing less than $5M) or exempt small  “venues” that serve less than 1000 people simultaneously
  • Exempt education-oriented admissions such as classes, workshops, and lectures
  • Exempt memberships for which “admission benefits” are not the primary or sole purpose or value for the membership (such as coworking and makerspace membership) or those whose admission includes education-oriented programming.  

Warmest Regards,

Casey McCarty

CEO, Idea Foundry