Well-Tuned: Take the Money and Run, or Musicians Avoiding Taxes

Photo by William Murphy from Dublin, Ireland, CC BY-SA 2.0 <https://creativecommons.org/licenses/by-sa/2.0>, via Wikimedia Commons

Benjamin Franklin once wrote in a letter penned around the time that the Constitution was ratified “..in this world, nothing can be said to be certain, except death and taxes.” Even though more than two centuries have passed, his words bear scrutiny…for some of us. For the wealthy, well let’s just say that even though they may not have figured out how to cheat the Grim Reaper, they have indeed mastered the Houdini-like tactics needed to avoid the long arm of the taxman.

Their millions are protected by armies of accountants and attorneys that do nothing but find ways to shift their funds around to take advantage of loopholes in the system. Some have moved their assets to countries with a more favorable tax system. To the rest of us, activities like these are called one thing- tax evasion.

The same maneuvering done by some of the world’s largest companies for decades are also being used by musicians to protect their money.

You can look back to the early 60’s to see some of the first examples of rock and rollers feeling the pinch of the exciseman. Entertainers from that time were beginning to make money that afforded them lavish lifestyles not unlike the Royals in England. Of course, this did not go unnoticed by the government.

Perhaps the most famous band in the rock and roll universe taking advantage of the gymnastics of avoiding tax are The Rolling Stones.

In 1971 The Stones left England due to the government at the time taxing high earners like them at 93%. They became what was known as a “tax exiles” when they moved to France that year. At that particular time, they were in the midst of recording a new album that would eventually become the classic Exile on Main St, released in 1972. The title of the album was a tongue-in-cheek reference to their living arrangements at that time. To this very day Mick and Keef can only spend a couple months here and there in the country they were born in.

In this day and age, The Stones are just as much a corporation as they are a band. Millions of dollars are made from album sales, licensing agreements, royalties and principally, the touring that they still do today six decades after their start in London in 1962. The touring is where it’s at for bands that have achieved the level of eminence that The Stones have attained. The revenue that is generated from sold out stadiums worldwide is comparable to a blue whale dining on mouthfuls of krill. It is almost inconceivable.

These monies are filtered through a myriad of accountants and companies like Promogroup in the Netherlands to save the band members millions of dollars they otherwise would be forced to pay in taxes. Mind you, The Stones do pay taxes but when considering the vast wealth, they as a group have amassed over the years, the amount they are paying is laughable when you scale it down and compare it to most of their fans.

The Stones are not the only group to take advantage of tax havens and maneuvering of assets to avoid taxation. Ireland’s own U2 also uses Promogroup after their home country made some tax code changes that forced the band to reconsider how they protected their earnings.

U2 finding ways to avoid paying taxes are seen by some as being hypocritical when you take into account the band’s and most importantly, their lead singer Paul (a.k.a Bono Vox) Henson’s stance when it comes to poverty that they have made during their career. Not to discount the accomplishments made by Bono and U2 when it comes to philanthropy and dedication to causes for the greater good. They have spent millions of their own dollars and spent hours of their time, using their well-earned status in the rock and roll industry to push projects and ideas that have benefited people all over the world.

However, at the end of the day even a band like U2 knows that many of the social services they support are paid for mostly though taxation. That information doesn’t keep them from finding ways to keep the government getting too big of a bite out of their colcannon mash though.

Many more artists have followed the same path of The Stones and U2. In today’s world, musicians are having a hard time when it comes to revenue due to streaming services that pay them a laughable percentage. An artist whose catalogue is on Spotify earns on average $0.004 each time one of their songs are streamed on its platform. You pay $9.99 a month. Who is winning there?

It is no wonder that some bands cannot make it today or are forced to tour constantly in order to survive (see David Crosby). Like him or not (and he has his share of haters out there), he is not chilling on a yacht somewhere enjoying retirement from rock and roll while the checks roll in. No, he is still creating, still performing live in order to survive. He, like many other artists, was taken advantage of early in his career by bad advice and even worse management (and a very nasty cocaine habit). He sold his music catalogue and is finding ways in his advanced age to make money outside of album sales. When you hear stories like Crosby’s, you can hardly blame an artist for searching out the means to beguile the taxman.

Artists like David Bowie, Phil Collins, Led Zeppelin, Rod Stewart and Pink Floyd who, in order to avoid the exciseman found a new country to reside in or, like the case of Pink Floyd in 1978, stayed out on the road constantly to avoid taxes.

The Beatles let the world know their thoughts about taxation when they released the classic Taxman. It was the opening song on The Beatles 1966 master stroke of an album, Revolver; a few years prior to the other performers becoming tax exiles. George Harrison indignantly wrote the lyrics after realizing how much of The Beatles earnings were…after taxes. Harrison said “You are so happy that you’ve finally started earning money – and then you find out about tax.”

“Let me tell you how it will be, There’s one for you, nineteen for me…Cause I’m the taxman…Yeah, I’m the taxman!”

The Beatles got creative with their tax issue by forming Apple Corps Limited to lessen their burden by paying a much lower corporate rate instead of the high-income tax being implemented on them at the time.

The tax codes followed by most of the democracies around the world are so convoluted that the working people paying into government coffers really have no clue if, what or how taxes are being paid by the wealthiest among them. Successful musicians, athletes, politicians, big business; they all figured how to beat the system all while asking us to donate our time and money for causes they chose to support. They can just write off their charitable expense. Just like that..

On the television show Seinfeld, an exchange between the characters Jerry and Kramer captures the essence of how confusing America’s tax code is when it comes to those write-offs.

Jerry: “You don’t even know what a write-off is.”

Kramer: “Do you?”

Jerry: “No, I don’t.”

Kramer: “But they do, and they’re the ones writing it off.”

So dear reader, as I write this it is Friday, April 15^th. In America that is the date most of us have to pay our taxes or face the wrath of the I.R.S.

Try not to think about the wealthy, knowing they are working, or should I say paying someone to work just as hard as you do to find ways to beat the system.

Just think, Tax Freedom Day this year is April 18^th. If you don’t already know what that is, Tax Freedom Day is calculated to show how long it takes the average American worker to pay off his or her share of taxes each year if paid off at once.

So, fear not, by Monday you will be like Mick, Bono, Phil and all the other rich folk out there, living tax free!

………and if you believe that, perhaps I can interest you in some prime Florida swampland property.

Till next time.

E Pluribus Unum