Tuesday, November 29, 2005
Interesting article in today's Wall Street Journal: Music to Songwriters' Ears: Lower Taxes; Country Artists' Group Presses Lawmakers to Slash the Levy on Lyricists, by Brody Mullins:
Country music is cool these days -- and now Congress may make it more profitable for the people behind the lyrics. A bipartisan group of lawmakers, prodded by members of the country-music industry, added a provision to pending tax legislation that would lower taxes for writers of all kinds of songs. The lawmakers propose to change a section of U.S. tax law -- written before singer Garth Brooks was born -- that would tax songwriters' handiwork as capital gains rather than ordinary income as under current law. ...
At issue for the songwriters is a 1950s-vintage tax provision that requires makers of creative works -- such as painters, novelists and songwriters -- to pay regular income taxes on sales of their work. Since songwriters tend to be self-employed, they wind up paying up to 35% in income taxes on the sales and more in self-employment taxes, rather than the lower 15% capital-gains tax rate paid by those who sell capital assets such as stocks.