Originally published in The Comics Journal, Number 167, April 1994
© 1994 THE COMICS JOURNAL
GROTH: Speaking of sitting in bed with unsavory types, I'd like to talk a little about your California tax -
MAVRIDES: My infamous tax dispute with the California State Board of Equalization [B.O.E.], the sales tax board. It concerns an unprecedented attack by the State of California on comics creators, the comics publishing industry and comics readership in general. If I go down, keep in mind you're all right behind me, directly in the line of fire. This is not just my case - it is our case.
I'm fighting a government tax bureaucracy's autocratic declaration that comic creators' original pages are merely "printer's aids" rather than literary manuscripts, works of visual authorship. Not only is the state insultingly denying author's status to comic artists, it's capriciously disemboweling our First Amendment right to free speech. And why are they doing this? For money. Only for money! GROTH: What's the current status of this? Are you going to be going to court? MAVRIDES: I hope not. I have no desire for this aggravating and expensive nonsense to drag on for ten more years. However, if it comes to that, I'm prepared to see it through all the way to the California Supreme Court.
It's a regulatory dispute centered around the B.O.E.'s misreading and misapplication of a sales tax regulation which defines what constitutes an author's manuscript. To date, the B.O.E. has maintained that its interpretation is correct.
Right now the case is being reviewed by the B.O.E. Appeals Review Section. Ideally, my position will prevail. If not, then my only recourse will be to sue the tax board. Should this happen, the Comic Book Legal Defense Fund has expressed their commitment to back a court battle. We want to avoid this if at all possible, but we can't afford to lose. The implications are so hideous...
GROTH: What would be the ramifications if you lost?
MAVRIDES: The probable destruction of the alternative comics publishing industry in California, a loss of legal literary status for comics as a whole, the possible removal of fundamental speech rights for creators involved in censorship cases, new creators' careers truncated by financial hardship, a constriction of variety and experimental work in the field.
A state win would also have chilling repercussions for childrens' book authors and publishers. Many childrens' books are indistinguishable from comics, using sequential illustrations to convey narrative, often without the presence of prose text. We're looking at an entire chain of catastrophic side-effects. The tax board's blasting away at literature with its eyes shut... they have to be slapped down and slapped down hard.
I should explain what this's all about. Keep in mind that a "sale" is any financial transaction involving the leasing of reproduction rights to the work or a direct sale of the work's copyright.
The State, in a series of regulations covering publishing, exempts from sales taxation author's earnings which are derived from the sale of an author's manuscript. Illustrator's earnings derived from the reproduction of an illustration are not exempt from sales tax collection. The B.O.E. holds that only a work comprised of prose text, whether handwritten, typed, scratched, what-have-you, can be considered a manuscript.
They say that original comic pages are only "camera ready artwork", mere templates used for the manufacture of reproductions, thus any income earned by their sale is subject to sales taxation. I strongly disagree with the Board's interpretation and maintain that my originals are undeniably "author's manuscripts".
GROTH: What is the purpose of that distinction?
MAVRIDES: The reasoning behind excluding manuscript authors from sales tax law is that imposition of such taxes could limit or prevent the publication of marginal or chancy works - works whose content the First Amendment was designed to protect, works such as alternative comics.
In my case, the B.O.E. is pushing their reading of this manuscript regulation so they can raise tax revenue. Period.
GROTH: They get a cut of the original art?
MAVRIDES: No, that's not it at all; they want a cut of the publisher's earnings made from my originals' reproduction. The B.O.E. has ruled that I now have to personally collect sales tax from all my California publishers based on my earnings. Every time I get a royalty payment, an advance or a residual check, I must bill the publisher sales tax based on that amount of that check. In San Francisco, this sales tax is currently 8.25 cents.
GROTH: You bill the publisher.
MAVRIDES: Yeah. Eight-and-one-quarter cents on every dollar I receive. Remember, they insist that all comics creators within the state working for California publishers do this, not just me.
GROTH: You pay personal income tax.. I thought constitutionally you couldn't be taxed on the same amount twice.
MAVRIDES: You can't pay the same type of income tax on the same amount twice. But there are state income taxes, and there are federal income taxes. These are both income taxes placed on the same income. That's not double taxation. Sales tax is not an income tax; it's another species entirely.
GROTH: Do authors pay this sales tax?
MAVRIDES: No and that's one of the key elements of my position. Authors' earnings, as derived from sales of their manuscripts, are exempt from this taxation. They're exempt because imposing an excessive tax burden on publishers' profits made from the publication of authors' work would cause financial hardship for any company which publishes and sells the work of marginal or chancy authors. Publishers like that generally make very little money as it is. If their minimal profits are reduced even further because of excessive taxation, they might be financially forced against their will to discontinue publication of less profitable books. Perhaps they would be driven out of business entirely. Their authors, no longer having access to publication and distribution of their strips, would be denied a primary form of Constitutionally protected speech. There are already too many roadblocks for those of us in this profession; our Government's not allowed to impose further handicaps to prevent our freedom of expression.
I'll give you a real example - a couple of years ago, California instituted a sales tax on newspapers and magazines for the first time. This was fine for any publication which carried a cover price - however, through an inadvertent oversight, poetry journals, weeklies, shoppers and 'zines that were distributed to the public for free also became sales taxable. For each copy that was given away for free, the State wanted sales tax paid on that transaction, even though there was no sale taking place. Most of these free publications are economically marginal, making little or no profit and here comes California with sales tax bills based on the number of copies distributed. Overnight, many papers were threatened with bankruptcy; if they couldn't afford to pay, the State would shut them down. The publishers protested that the imposition of this tax would close their doors, denying them their First Amendment right of free speech. The legislators recognized that this was a valid argument and rescinded the sales tax on free papers.
GROTH: What about a painter who has a collection of paintings published? Does he have to pay this tax?
MAVRIDES: I can't specifically address that. I'm not a tax lawyer. My argument with the tax board is about the topographical nature and literary qualities of my original comic pages. They are saying that my original boards, in the form I turn them into the publisher, are only printer's aids, illustrations. Illustrations are taxable. GROTH: So the artist of a book of illustrations can be taxed?
MAVRIDES: I really couldn't say. I suppose there are exceptions.
GROTH: Why would the ideas conveyed by the written word be given preference over ideas presented visually?
MAVRIDES: The B.O.E. admits that visual imagery conveys ideas. They're denying that sequentially linked visual imagery, as used in the visual narrative comic story, functions exactly the same as and is identical to the informational and intellectual qualities of a prose manuscript.
Ironically, the B.O.E., in its most recent communication with me denying my originals their manuscript status, states that, "Taxpayer is an author and creator of comic literature." They admit that sequential comics are literature, that I am an author, but blindly insist that it's a type of literature that has somehow come into being without an author producing a manuscript. Common sense has not prevailed so far.
GROTH: It's kind of weird for the IRS to make those kinds of artistic distinctions, isn't it?.
MAVRIDES: Once again, it's NOT the IRS, it's the BOARD OF EQUALIZATION! The Board's blanket pronouncements about the physical and intellectual nature of comics are extremely alarming. "Weird" doesn't come close to describing this appalling situation...
GROTH: Does work-for-hire enter into this?
MAVRIDES: There's no distinction between work-for-hire and works where the copyright is retained by the creator. This dispute includes both where it concerns sales taxation.
GROTH: Are you conceding that an illustration for a Coca-Cola advertisement should not be considered artistic expression in this context?
MAVRIDES: The Coke illo is undeniably a work of artistic expression, but artistic expression is not the issue here. Illustrational and copywriting advertising work is very clearly defined in B.O.E. regulations. And in fact when I do illustrations for advertising, I charge and collect sales tax just as I'm supposed to for that particular type of work.
GROTH: What would your position be on the art and writing done to produce a Superman comic, which is clearly done at the direction of the company?
MAVRIDES: The original Superman pages, containing the artwork, text lettering and color, constitute an original authors' manuscript and thus, any earnings derived from them are exempt from sale taxation.
GROTH: Why is that literature and a Coke ad not?
MAVRIDES: Because the Coke ad is an isolated image. It's unarguable commercial purpose has nothing to do with denying it "author's manuscript" status, which is what I think you meant by "literature" in this instance. While an image, such as an ad illustration, might well "tell a story," it's singularity prevents any bestowal of full literary status.
GROTH: So what if there was Coke Man, and they did comics promoting Coke? That would not be exempt?
MAVRIDES: Possibly, under certain circumstances. You'd have to go to the commercial art sales tax regs for the specifics. Certain types of sequential illustration, such as movie and TV storyboards, are considered sales taxable, under the regulations for those industries.
GROTH: It strikes me as intrinsically dicey for the government to make aesthetic decisions.
MAVRIDES: It is very dicey, and the B.O.E. is blundering into it full-tilt. The government has no business whatsoever making aesthetic pronouncements for any reason.
This is not a question of "fine art" as opposed to "commercial art." That's not the issue. All work, all objects, all intellectual property are "commercial" in the sense that they can potentially be bought and sold. If I were to sell the actual original pages themselves, not the copyrights, to a buyer, I would charge sales tax on the sale. I'd be physically selling an object. You buy a pencil for 39c and you pay sales tax. You buy a Mark Rothko for five million dollars, you pay sales tax.
Both the B.O.E. and I are making no aesthetic distinction between "literary" comics and "commercial" comics. The aesthetic judgment being made by the B.O.E. is an inadvertent by-product of their insistence that physical prose, constructed with alphabet characters, and only alphabet characters can be used to construct a manuscript.
GROTH: You're making a black and white judgment. MAVRIDES: They're the ones making the black and white judgment. They look at a comic page and they only see individual drawings. They can't get past that. The contention is over the definition of the physical and intellectual qualities of a comic strip manuscript. Only strips. The original of a single-panel cartoon cannot not be a "manuscript" because there is no sequential closure to link individual cartoon panels into a continuous story.
I could draw my comic stories on the sides of live cats and dogs, and ship the animals to the publisher. It doesn't matter if I'm producing it on a magnetic disk, an animal, a piece of paper - these originals would all be manuscripts. I could do panels on 9x9 foot oil paintings, as long as they were reproduced sequentially, then the original paintings would be a manuscript. Why, I don't even need words to tell a story in pictures. In fact, if I'm clever enough, I don't even need pictures to tell a sequential story. The Board says no. A manuscript in their view has to be text and only text.
How does this affect me personally? Automatically, for my publishers, with every penny they pay me, I'm less profitable. A lot of publishers may not wish to publish me for that reason. They'll find this distinction will fade within a short period of time because the Board has told me that once they're through with me, they'll go to Rip Off Press, they'll go to Last Gasp. They'll ask for a list of all visual authors residing in California that worked for those companies within the last four years. The B.O.E. will go to these same authors, make them register as a business, make them file sales tax returns, audit the returns, and send them sales tax bills with interest. They'll also find out from those same creators' audits other in-state comic companies the authors are published by. This is in addition to creators and businesses the B.O.E. might become aware of on their own like Bongo, Image, Charles Schultz Inc., or who knows who.
GROTH: Who owes this tax? You or the publisher?
MAVRIDES: I owe them the sales tax. I am personally liable for the tax due. I must collect it from the publisher and turn it over to the State. Now the B.O.E. can also back charge. They can go back three years from the date of filing. Say that I'm presented with a back sales tax bill. Technically I missed the boat by not charging the publisher sales tax for income I earned from them during the three years previous to my filing. The publishers are no longer legally responsible for paying back sales tax bills I send them, unless they want to be nice about it. Otherwise I'm left holding the entire liability for the past due sales tax. This process will be the repeated exactly the same for all creators and publishers within California affected by this ruling. Comics creators will become junior tax collectors.
All of a sudden, somebody like Rip Off will have this unexpected tax burden. Their catalog is hardly making any money as it is - you should be familiar with this, Gary - and suddenly it becomes almost 9% less profitable. The alternative is to either make less money or raise the price of the books, pass the tax on to the reader. You'll make up for your loss that way, but sales will go down because your book is more expensive. Which might force the price of the books up again to make up for the lower sales, resulting in an even further loss of sales... a horrible spiraling, destructive loop. You'll also have less capital to finance publishing new titles. You'll drop other titles. Cartoonists who are just starting out will suddenly find they can't get published. A cartoonist that might only make $200 a year suddenly has to hire an accountant in order to file their $16.50 that they collected on their "sales". Book publishers who were thinking of doing a line of comics might not want to now because all of a sudden, "This one type of book, it's less profitable than all our other types of books, so why should we bother?
GROTH: This is only in the state of California.
MAVRIDES: Yeah. But other states get their ideas from California. Idaho doesn't exactly have a thriving comic industry at the moment. But the next Kevin Eastman or Gary Groth could turn up there. And if the Idaho legislature puts a similar reg into law before a comic company even exists, there would be little hope of challenging it after the fact. In the Federal courts, California and a host of other states haven't let up in their pursuit of being allowed to charge sales tax on interstate commerce. One of these days they might prevail. DC and Marvel and everybody else would be dragged into this kicking and screaming. No matter how those corporations manipulate their definitions of employees or work-for-hire, they'd be instantly taxed because a lot of their high-end creators live here. It becomes this whole network of interstate taxation on people who live in other states.
On top of that you've got a form of literature in which art spiegelman wins a Pulitzer Prize for his work, who, according to the B.O.E., is not an author! What does that do to the academic acknowledgment and social acceptance of this unique branch of literature, one that melds both art and writing, one where art functions as writing? The B.O.E. is declaring that a drawing can only function in one direction, it can't hold two intersecting artistic qualities and purposes at the same time. That's in blatant denial of an awful lot of intellectual theory, in complete ignorance of a literary record which proves otherwise. They're not out to "get" me because they can't abide the Freak Brothers or because they're out to destroy independent comics - for the first year, they weren't even aware of what exactly it was I did, in terms of titles or content.
GROTH: One thing I don't still don't quite understand is why they would make a distinction between writing as a form of personal expression, and painting or photography as a form of personal expression.
MAVRIDES: It's not a question of "personal expression" in their narrow view. Perhaps manuscripts are exempted because they're connected with publishing. And the publishing industry is a well protected business, with countless legal precedents and political lobbyists to defend its historic turf.
GROTH: But publishers publish books of photography.
MAVRIDES: Just like the cola ad, photographic reproductions are disconnected images, meant to be viewed without narrative closure. Fumettis, on the other hand, share sequential linkage and should be exempt.
To go back to comics, the B.O.E. doesn't make any distinction between "adult" comics and "kids" comics, it's all the same. The quality, the level of art and writing. the subject matter, the audience, none of that matters - a comic strip is a comic strip. A Spiderman comic and an S. Clay Wilson comic are on equal terms in this argument. Everybody goes down all at once, or everybody wins all at once. Taste doesn't matter zip in this case. So you have a lot of people at the bottom suddenly unable to get their work in print; you've got prices going up and fewer comics being sold - big or small, it's all under the tax ax. Spawn, Bongo Comics, Freak Brothers - all tapped for their earnings. Anyone thinking of starting up a giant comic company in California might do better to pick Nevada instead. California loses big time in income that way. Image or Malibu Comics might want to move to Oregon to get away. California will lose all that money. God knows this state needs money! The voters here shortsightedly cut their own future throats in 1978 when they passed Proposition 13, which drastically reduced property taxes, which is why California's desperate for revenue now, 16 years later. But you don't rip the First Amendment into pieces if you need funds for more prisons -
GROTH: Correct me if I'm wrong, but it's not the publisher who suffers, it's the artist.
MAVRIDES: We're all going to suffer: the artists, the readers, the publishers... The publishers would take it on the chin first. Rip Off Press or Last Gasp could conceivably go out of business under a burden like this. It could be the final straw that breaks their backs. This is a fight for survival.
GROTH: Even if the publisher moved to Oregon, if their artists lived in California, they'd still have to pay that tax, right?
MAVRIDES: No, then it would be out of state work.
GROTH: So both the artist and publisher have to be in the state.
MAVRIDES: Yes. But this is California, not Oregon, with an economy larger than that of most nations. There are a lot of publishers and a lot of artists based here, some of them are making a lot of money, most of them are making very little.
GROTH: It would certainly be a good reason not to publish in California.
MAVRIDES: An excellent reason. Fantagraphics may have gotten out just in time!
GROTH: Well, I'll tell all our artists to move.
MAVRIDES: It's just the goddamn indignity of this. How dare these accountants say comics creators are not authors! We are! We work in a medium that turns pictures into a form of written communication. We tell stories with pictures, the same exact way stories are told with words, only we get to use words too. If I cut a panel out of my page and hung it on an art gallery wall, it would cease to be literature because I removed it from the context, the closure, that gave it its literary characteristics. It's only when comic art is in this unique niche of sequential presentation that it takes on this double identity. Many cartoonists have a hard time understanding the semiotics and topography of their own medium.
GROTH: I guess this is the very best example you could come up with as to the contempt comics are held in, to not acknowledge them as a legitimate means of literary communication.
MAVRIDES: That's precisely what's at stake! When this first started I don't think they thought about comics at all, much less contemptuously. Comic books aren't specifically defined or addressed as such in California regulations as -
GROTH: I don't think they think about it, it's just a subliminal...
MAVRIDES: Not even that. I have the impression that most of those people haven't read comics since the 2nd grade, if even then. But comics have a ubiquitous presence by now. How could they ignore such a juicy plum when they see headlines like, "Bang! Zoom! Comic Books A Multi-million Dollar Industry"? All those fat paychecks ripe for plucking. The B.O.E.'s been acting a greedy monkey that's got its hand down a narrow-necked jar holding a fistful of nuts. It can't willingly let go of even a single one - and its fist is too full to withdraw. And I'm the bottleneck, keeping the prize from their maw. Their mouth's watering; they can taste the potential revenue.
What a disappointment I've been for them. They pull the first experimental hamster out of its cage and what does it do? It bites them. They didn't expect me to put up a fight, they didn't expect me to show up with Kaye, Scholer, Fierman, Hays & Handler, one of the top law firms in the country, courtesy of the Comic Book Legal Defense Fund, who correctly perceived this was a vital first amendment emergency, that I needed the best lawyers that I could find. The B.O.E. sat up a little straighter when I sent in Mr. Presant, a nationally respected sales tax lawyer to represent me. I've tried to follow through on everything I've told them. Right from the beginning I promised, "The size of the bill doesn't matter. I could pay it. But even if this bill was for ten cents, I would still fight it because of this issues involved. I will refuse to pay you a dime to my last drop of legal blood."
GROTH: It's fortunate they didn't pick on artists who would just hand over the money.
MAVRIDES: It was just a random draw. Good luck for the industry, bad luck for me. The case began by an accidental accounting error on their part, with both sides slowly comprehending the implications. They suddenly realized, "It's more than just the $1,000 from Mavrides - there's a potential gold mine here." So far, they haven't acted like they care if small creators and publishers are destroyed in the process of harvesting. There's real money at stake, and that makes it unbearably appetizing for them.
They can't understand why I'm putting up this fight - it's not that big of a bill. From their perspective, as an individual, I'm going to lose a great deal more money than I'll ever hope to save should I prevail, and I have. I lost at least $20,000 of income last year alone from dealing with this case. I've been distracted from my work, emotionally depressed from stress and isolation, had my creative energy sapped... to put seventeen years of my life into comics and end up in this situation... it's exhausting and debilitating trying to raise consciousness in the industry and public over this issue.
GROTH: How successful do you think you've been in doing that?
MAVRIDES: Fairly successful. Not entirely until everybody concerned knows what's going on, not until the B.O.E. is defeated.
GROTH: What kind of tangible support have you gotten, aside from the Legal Defense Fund, but in terms of artists?
MAVRIDES: A great deal of support from individuals large and small: Denis Kitchen, art spiegelman, Kevin Eastman, Matt Groening, the San Francisco Cartoon Art Museum, the San Diego Comic Convention, Larry Welz, all the contributors to the Defense Fund and a great many others...
I have to explain less and less about the specific issues as time goes by. Ideally, when people talk about the case now, it isn't "Mavrides' IRS problems." Who would care about my personal income tax problems unless they turned out to be a Nixonian Get-Mavrides Operation? It's not that at all. It doesn't matter if you agree with my personal politics or not. It's not just my ass that's hanging in the wind here, folks!
I need people to spread the word, to boost comprehension of the issues involved. I need people who have press contacts to use them in order to publicize the case. I need people to write the B.O.E. directly and let them know that the public is not going to put up with this ruling. Consciousness needs to be raised among the rest of the publishing industry, especially those companies which publish children's books. The Defense Fund will need a lot of contributions to cover legal expenses should this go to trial...
GROTH: Have you gotten any support from the large publishers?
MAVRIDES: The corporate big boys? Not that is apparent so far, but these things take time. Interestingly enough, when I was initially trying to raise awareness and support in the comics industry over this, DC was at least polite enough to hear me out, and write back, "We don't think this applies to us but good luck." They took it seriously, whereas Marvel and Malibu just blew me off. I hope they come around... It's really a case of all hanging together or all hanging separately.
Original file name: PAUL MAVRIDES INTERVIEW!
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