It is that time of year when honest Canadians self-report their incomes and voluntarily pay their taxes. But is the tax system impartial to all taxpayers, or does it prejudice against certain activities while subsidizing others? We can learn a thing or two about challenging the status quo from the fictional copyright cases on taxation by the British politician and judicial satirist A.P. Herbert.
Case No. 36 Haddock and Others v Board of Inland Revenue
The plaintiff tried to reduce his taxes by arguing that arts & literature should be entitled to the same benefits that trade & commerce already enjoyed for “income-tax purposes under the heading of (a) Expenses and (b) Wear and Tear of Machinery and Plant.”
The court agreed on the first issue of Expenses since, “The manufacturer of soap, who makes and sells soap to the value of ten thousand pounds, at a cost to himself of eight thousand pounds, is taxed upon two thousand pounds. If there is no profit there is (in theory) no tax.” This led the court to oppose the injustice whereby, “The position of the author, artist, or composer is very different. The author is taxed, practically speaking, not on profits but on receipts, on almost everything that comes into the till. … [The author] cannot write about nothing (though one or two come very near to it). The whole of life is his raw material and, like other raw material, it has to be paid for.” As a result, the court answered the questions of, “[how] can a man write about Monte Carlo or Cowes unless he goes to Monte Carlo or Cowes? How is he to study and depict the gilded life of Society without constant visits to the Saveloy Grill Room, to Covent Garden, to the Riviera, and other places where Society is to be found?” by pointing out that “it is not denied that if a soap-manufacturer were compelled for business reasons to visit Cowes or Monte Carlo he would be permitted to deduct the necessary expenses of the expedition when calculating his taxable income. I see no reason why [an author] should not do the same.”
The court also agreed on the second issue of Wear and Tear of Machinery and Plant since, “The author’s machinery and plant are his brain and his physique, his fund of inventiveness, his creative powers. These are not inexhaustible; they are seldom rested (for the reasons given above); the strain upon them increases as the years go by, and in some cases, I understand is aggravated by late hours and dissipation. If it is proper for the soap-manufacturer to be relieved in respect of the wear and tear of his machinery and the renewal thereof (which money can easily buy), how much more consideration is owed to the delicate and irreplaceable mechanism of the writer!”
After righting the unjust taxation of arts & literature vis-à-vis trade & commerce, the court did not rest but continued with a lengthy justification for its decision: “There seems to be a notion abroad (especially in Parliament, where every erroneous notion is carefully incubated) that the author deserves less generous treatment than the soap-manufacturer, on the ground that the latter is an employer of labour. … The authors, writers, and composers are in a sense the biggest employers in the country, for they are the only original creators of employment. Their books, their articles, their music must be typed and printed and bound and distributed, performed upon the stage, the wireless, the gramophone, and the screen. The publishers, printers, compositors, bookbinders, and booksellers, the actors, musicians, singers, and stagehands – nay, the very newspaper proprietors and their enormous staffs, owe their employment, their earnings, and their profits to the creative mind and technical skill of the writer, since without him their occupation would be nothing and their machines be silent. He is the producer and they an army of middlemen; he is the true creator of wealth, and they, if I may employ the genial language of a certain political party, are but parasites upon his brains and labour. Yet Parliament, in its recent Derating Act, designed to encourage and increase employment, extends the privileges of that Act to the printer and not to the author who finds employment for that printer, ‘derates’ the ‘factory’ section of a newspaper office, but not the editorial side, without which the factory would be idle and valueless. My Lord, how characteristically crass of Parliament!”
Case No. 38 Rex v Cochran
Another plaintiff also protested the differential taxation of arts & literature vis-à-vis trade & commerce by refusing to pay the Entertainments Duty on theatre productions such as “a religious mime called The Miracle, an historical tragedy by the poet Shakespeare, and a comic opera written by Mr. Albert Haddock.”
A most sympathetic jury agreed with the plaintiff after receiving jury instructions that sounded more like a summation of history: “The public memory is short, and the historical knowledge of many of us is defective; yet it is surprising that the newspapers of our land do not give more attention to the Entertainments Duty and more support to those who agitate for its remission or reduction. For in essence it is dangerously similar to those Taxes on Knowledge which were remitted after a protracted struggle only eighty years ago: taxes on the communication of minds, taxes on the distribution of information and ideas, taxes inimical to freedom of expression, and taxes levied with especial harshness upon the Newspaper Press.”
The court generously paired its history lesson with a civic lesson: “Therefore they should ever be on their guard against any encroachments upon liberty of expression; and therefore, I repeat, it is strange if they do not show an active and fraternal interest in the struggles of the theatre. For, though they may be surprised and even indignant to hear it, there is, in the account of principle, no real distinction between the two institutions. Both are channels for the communications of minds, for the distribution and exchange of thoughts, ideas, and information. A tax upon either is a tax upon knowledge and literature.”
It is no surprise that the jury agreed with the plaintiff, especially after hearing a civic warning from the court that: “The tax is levied not upon profits but upon receipts, and in that respect is almost unique. It is levied not upon gamblers, bookmakers, usurers, racecourse touts, idlers, thieves, vagabonds, card-players, misers, or moneylenders, not upon those who sit in their homes or hoard their money to the prejudice of trade and employment, not upon those who devote their time and energy to the suppression of people’s pleasure, but upon respectable, good-hearted citizens who spread happiness, instruction, and culture among their fellows and maintain many thousands in employment, either by providing or attending (and thus supporting) what are loosely called places of public entertainment. When I consider this tax I am forced to the conclusion that in the opinion of the Legislature the business of entertainment has a criminal character, or at least is so offensive that public policy demands its discouragement and gradual suppression.”
Case No. 52 MacIntosh and Others vs Haddock, Haddock, Haddock, Haddock, and Haddock, Ltd
This last example of how to reduce taxes on arts & literature illustrated how the corporate system had been subsidizing trade & commerce. Mr. Haddock was a writer who “following the example of other and more prosperous writers, he turned himself into a limited company … [in the same manner as] a bootmaker turned himself into a company … [thereby taking] legitimate advantage of the laws of the land in order to ease the burden of taxation at certain points where admittedly it bears with undue severity upon the better class of author.”
The court easily accepted that a corporation can write books just as it can make shoes: “A corporation has the same powers of contracting as a natural person, and if it can write a good contract why not a good poem or book? It can be sued for libel and summoned before the magistrates to answer for an obscene or blasphemous publication; so there is no danger there.”
The court just as easily – and most eagerly – accepted that a corporation can own copyrighted works in perpetuity, since literary works do not enter the public domain until fifty years after their author’s death and a corporation never dies (unless it is dissolved). In doing so, the court rejected the policy argument that “by this arrangement those writers who are not corporations are placed at a disadvantage because they cannot secure such favourable terms; and together with certain publishers and others who make a cheap and profitable business of the exploitation of non-copyright works, they contend that in justice and equity the company should be dissolved.” Instead, the court advised such writers to incorporate in order to join Mr. Haddock in dodging the Copyright Act!
A.P. Herbert’s misleading cases continue to entertain because such fiction still has much to reveal about judicial prejudices and to teach about legal processes. Perhaps this judicial satirist’s legacy will be to inspire intellectual property students to convince tax collectors this year that arts & literature can be educational and should be subsidized even more.
Shen Goh is an instructor and PhD candidate at Osgoode Hall Law School.
 AP Herbert, Uncommon Law – Being 66 Misleading Cases revised and collected in one volume (Great Britain: Redwood Burn Limited, 1979) 42 at 231.
 Ibid at 231-232.
 Ibid at 232.
 Ibid at 233.
 Ibid at 234.
 Ibid at 234-235.
 Ibid at 243.
 Ibid at 243-244.
 Ibid at 246.
 Ibid at 247-248.
 Ibid at 327.
 Ibid at 328.
 Ibid at 330.
 Ibid at 330-331.