The Sunday New York Times business section carries an article about tax shelters in the Netherlands for people such as writers, artists, musicians, and other entities who get most of their income from royalties; in the aggregate, these folks are able to escape tax on approximately $1 trillion in annual income. With a little creative accounting and legal work, the effective tax rate can be reduced to 1.5 percent. Bono and U2, the billionaire advocates for greater aid by rich world governments to people in poor countries, have not had to worry about this until recently. Ireland has long exempted all income by musicians, writers, and artists. Bono was thus out there advocating the spending of tax revenues to which he himself had not contributed. Ireland is going to start taxing royalty income over $320,000 per person per year, which has led Bono and U2 to migrate their royalty-generating properties to the Netherlands. The article talks about how Bono is taking criticism as a hypocrite for advocating massive tax-funded relief schemes when he himself has never paid any taxes.
Is Bono unusual for voting his pocketbook?
I thought about the people I know who are relatively well-off. They are more or less evenly divided between Republican and Democrat, but the division is not random. Those who get their money every year as a salary tend to be Democrats. Those who start small businesses and get their money in big lumps as capital gains when they sell those businesses tend to support the Republicans. If you are a W2 employee with a high income, it turns out that it doesn’t cost you much to rail against Bush’s idiocy and the unfairness of heterosexual-only marriage. Proposed tax rates on ordinary income are very similar from the two parties. On the other hand, the Reagan capital gains tax cuts were dramatic, making it much more lucrative to start, grow, and eventually sell a company. A small business guy who says “I hate the Republicans” is saying “I am so enthusiastic about the teaching of Evolution in Kansas schools that I want to pay twice as much in taxes.”
Politicial scientists have found that the correlation between income and party affiliation isn’t all that strong, but they were looking at ordinary income where the tax policies of the parties aren’t very different. I wonder if people who made most of their money via capital gains disproportionately support the Republicans….
Bono has paid millions in taxes in Ireland. It is only the royalty income which is protected. On top of that (as the article mentions) U2 pays millions in taxes globally on all sorts of endeavors.
I see no conflict. He thinks the government should do more to help the poor and he doesn’t want to give more of his money to the government. Maybe he believes the government already has enough money. Maybe he believe HE can help poverty more by spending his fortune a little later, when it is larger.
That was certainly the case with Gates. He’s done more good now than he would have if he had spent earlier. And if Gates’ two billion in the Foundation were in the hands of the government how much would be making it to Africa to help end childhood blindness? I’m guessing none, or close to none. But it would help the war effort, I guess.
Taxes, I’m sure there are as many answers to tax questions as there are people in the world. The fact as I understand it is that the most lucrative part of compensation for musicians is royalties. One can simply look at what Michael Jackson paid for the Beatles songs (publishing rights) to see the value. Bono sounds like a shrewd businessman who if he was getting these royalties in the US would have been taxed at ordinary income rates. Instead of paying “millions” in tax he would have paid “hundreds of millions” in taxes. Is he a hypocrite, who knows, I’ll leave that to people who are much smarter than me to decide. He seems to have done much for the less fortunate in this world and for that I applaud him.
Personally I have a problem with the goverment being in the charity business. Its not very effecient at it at best and it is can be very corrupt at its worst. People also seem to forget that taxes are not government’s “revenue”, rather it is money that is forcibly (in this case meaning you have no choice whether or not to pay) taken from us ,the citizens. It is our money that is not taken from us in the case of a tax cut versus the government’s money that is given to us as Teddy Kennedy would like us to believe.
Personally, my pocketbook is one of the last issues to influence my voting decision. I’m not going to tell another person what to do with thier money. I guess that makes me a conservative but I’m a registered independent because I don’t believe we are a two party system anymore but an oligarchy. Both sides are equally stupid, corrupt and become insanely wealthy during their time in office.
The more money that is in the hands of people interested in helping other people, the better IMHO. I don’t really think that Bono’s efforts to help Africa will do a damn bit of good. Whatever aid goes there usually gets siphoned off before it actually makes it to the people in need.
Regardless, if it’s legal and you can do it, put your money where it is taxed the least, but remember to help someone in need.
Regards,
Chris
I live in dublin (inchicore) and from what i know bono lives here because its a sane place to bring up your kids espically if your rich!!!!
We keep our feet on the ground here no matter what you have or who the world thinks you are!!
I very much doubt he lives here for tax reasons, ireland is his birth place and just happend to have a very healthy tax exemption for artists.
I am sure the goverment of the day never dreamt that a rock band from little old ireland would have so much global success!
I have just returned from kenya and tanzania and after seeing the poverty for myself i applaud bono for his work on africa!
If we all took time and helped in a good cause we would be getting some where!
regards,
stephen
I’m just in the middle of reading “U2 by U2”. It’s a fascinating read for fans of the band. In 1983 they didn’t have enough money to fly home from their US tour. I imagine things are different now. I don’t think band members would avoid paying whatever Irish taxes that are now required. As for Bono, he does good work and who’s to say he won’t end up like Bill Gates and start a foundation a few years down the road.