Tuesday, June 2, 2009

How Ronald Reagan is Partially to Blame for Our Aesthetic Famine

Ronald Reagan is guilty in this matter only to the extent that he did not intercede in the aftermath of the 1979 Supreme Court decision known as the Thor Power Tool decision. The court case dealt with the valuation of inventories for tax purposes. It was applied to book publishers which had, by long practice and tradition, been given special treatment.

Before Thor Power Tool, publishers showed the printing expenses of a new book in the year it was printed, even though the books might sell over a twenty-year period. This reduced the taxable current profits and, therefore, current taxes. It was a special priviledge given to publishing, in the interest of public education,

And then, with Thor Power Tool, the IRS took the priviledge away. The publishers now had to re-calculate their income and tax according to the new rules on their entire 20-years of accumulated inventory. Afterward, the new rule would bump up annual income and tax, but the spike in income and taxes on the entire inventory in that first year was like a tidal wave.

More books were destroyed by that IRS action than any other event in human history. Millions of books were pulped or burned to avoid the taxes.

The choice of paying taxes or destroying books also motivated the corporate consolidation of American book publishing, the take-over of book publishers by entertainment conglomerates and the eventual preponderance of non-US ownership of those conglomerates. The IRS publishes statistics for 2002 - US book-publishing is 63% foreign-owned, US film-and-video is 64% foreign-owned.

And the price of books sky-rocketed. One of my favorite books is The Embassy Letters, by Mary Wortley Montagu. She was the wife of the British Ambassador to the Ottoman Sultan. Her book describes the overland voyage from London to Istanbul in 1716. Her book has been in print for almost 400 years, as a colorful description of daily life at that time. I watched the price of the Modern Library hardback go from $4.95 to $13.95 - the price of paying both the back taxes on the inventory and the new corporate overhead.

If only Ronnie and the guys around him had intervened on the application of Thor Power Tool to publishing, our cultural landscape would likely be far deeper and richer than it is today.

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