In November 1996, the county surrounding Chicago adopted an amusement tax. Under the relevant municipal code, Cook County collects three percent of what people pay for just about any type of public entertainment inside its boundaries. That goes for stage productions and sporting events, rodeos and flower shows, pinball machines and jukeboxes. But there are exemptions. For instance, the tax doesn’t apply to admission fees for “live cultural performances” in spaces that hold fewer than 750 people. Or so the ordinance says, anyway.
On August 18, the Chicago Reader reported that county officials wanted several small Chicago music venues to pay six figures each in back taxes, apparently for not meeting the amusement-tax exemption. On August 22, the Reader and the Chicago Tribune reported the county was going after two venues, Evil Olive and Beauty Bar, for about $200,000 apiece. At a hearing the same day, a county official made the rationale clear: The exemption refers to the “fine arts,” and neither rock’n’roll nor country, let alone newfangled rap or DJ-based music, would qualify. Yes, this is for real.
In Cook County’s defense, its rules do look about 60 years out of date. Here’s what the code actually says: “Live theatrical, live musical or other live cultural performance means a live performance in any of the disciplines which are commonly regarded as part of the fine arts, such as live theater, music, opera, drama, comedy, ballet, modern or traditional dance, and book or poetry readings.”
No matter how stodgy the ordinance is, though, the hearing officer, Anita Richardson, may be wishing for a do-over of her own live performance. “You’re going to have to make a legal argument that places what disc jockeys do within the scope of fine arts,” she told the venues’ lawyers in court. “You’re going to be hard-pressed to prove that the [county] commissioners meant for rap music to qualify as the fine arts. None of the definitions that I’ve come across have included the activities of DJs doing what they do as fine arts.” This, from the city of Frankie Knuckles, the pioneering DJ whose death was mourned by the president and whose vinyl collection is housed in a Chicago arts center; from the city of Kanye West and Chance the Rapper.
Outrage was widespread and virtually immediate. A Tribuneeditorial called the debate “downright embarrassing.” Evil Olive and Beauty Bar both said paying the tax would put them out of business. One county commissioner, John Fritchey, hopes to bring the county ordinance in line with the city’s, which includes a special exemption for performing DJs. He says he plans to introduce the proposal at the county board’s September 14 meeting, meaning it could potentially pass when the commissioners convene again on October 5. The venues’ next hearing is set for October 17, when their lawyers will be able to call on musicologists to explain the art of DJing.
“It’s ironic that this issue is taking place in Chicago,” Fritchey, the county commissioner trying to update the local ordinance, tells Pitchfork. “While we’re the city that broke Liz Phair and the Smashing Pumpkins, we’re also the genesis of Frankie Knuckles, Common, and Chance. For government not to recognize those artists as musicians is clearly out of step with reality. It’s hard for me to understand how a Deadmau5 can play before 50,000 people headlining Lolla and not be considered a musician.” (As Chicago magazine points out, the list of DJ performers at Beauty Bar alone spans from Andrew W.K. to Ellen Allien.)
If Evil Olive and Beauty Bar lose their case with the administrative law judge, they can appeal to an Illinois circuit court. But it’s unclear how many other clubs in Chicago could face similar threats to their existence. And the idea of an official deciding what is and isn’t art should raise concerns far beyond Cook County—which, by the way, is hardly the only place trying to drum up some extra cash these days.
Pitchfork reached out to three Chicago tax attorneys to explain the technical aspects of the county’s case, and to get their opinions on how strong of a case the venue owners have in court.
DJing is widely considered an art. That could matter.
“There is an argument to be made,” says Adam Fayne, a partner at Arnstein & Lehr. “Whether it’s a winnable argument, that will be up to a judge. There’s a lot of gray area in the law with respect to how music has evolved in the last decade or two. A lot of music fans would probably take the position that DJing, house, electronic music is an art form.”
The definition of “art” changes over the years.
“Particularly at the city level and the county level, there’s not a whole lot of legislative history as to what is considered a fine art at one point in time,” says Michael Wynne, a partner at Reed Smith. “If you considered beat poetry in the ’50s to be a fine art, then I’m not sure how far from beat poetry rap music is. The painter Pollock, some people would say that’s not art, but it’s been hanging at the Art Institute, so maybe that makes it fine art.”
But legal precedent may be against the venue owners.
“They’re at a disadvantage,” Wynne says. “There was a 2009 case the Illinois Supreme Court ruled on. The same exemption was at issue, but it involved adult entertainment dancing. The court basically said you have a point that you can’t make a content-based discrimination in taxation. You can’t infringe on the First Amendment when you say you’re going to tax something based on its content. But the court said this is an exemption from tax. You can have some content-based determinations with regards to exemptions because they are regarded as being incentives. The city doesn’t have to incentivize certain things. To the extent the city chose to incentivize fine arts, that seemed to be a non-content-based classification that it could uphold.”
Who gets to say what’s fine art, anyway?
“If you go back, it’s not very far apart from Justice Potter Stewart saying he knows pornography when he sees it,” Wynne tells Pitchfork. “There’s still a question of judgment of who sees one thing to be a fine art and who seems something to be entirely different than a fine art.”
First, they came for Cook County.
“This is news now because we’re starting to see an increased trend where states, cities, counties, and other municipalities are looking at increased revenue,” says David Blum, a partner at Akerman. “They have underfunded pension obligations. Now there’s been a greater focus on bringing revenue in. It’s causing all these various jurisdictions that we’ve not heard from before to beef up their audit staff, take a harder look at their laws, and then go out and try to bring revenue in.”
What were the tax collectors waiting for?
“The thing about an amusement tax, really it’s a tax on the consumer,” Blum tells Pitchfork. “Had these clubs known the tax was owed, they would have collected it when they sold the tickets. To get this estimate after the fact, with no prior guidance or notice, is really the biggest problem here.”
Even if you win, you lose.
“You have these two businesses faced with an assessment that they can’t afford,” Blum says. “If they win, they may just win, and the county may drop it. But if the county wants to make a test case out of this, then even if they win at the administrative hearing, the county can then appeal it to Illinois circuit court and force them to continue to pay legal fees.”
The best way for small Chicago venues to stay afloat, then, may be for the Cook County board of commissioners to hear the voices of their local music community—contact information is on the county website—and allow the tax exemption.
Music scenes in other cities shouldn’t get caught waiting for the drop.