When the Rolling Stones Hit the Laffer Curve

Michelle V. Agins/The New York Time

An interview with the Rolling Stones reveals some of their business and wealth-protection strategies. “The whole business thing is predicated a lot on the tax laws,” said Keith Richards. “It’s why we rehearse in Canada and not in the U.S. A lot of our astute moves have been basically keeping up with tax laws, where to go, where not to put it. Whether to sit on it or not. We left England because we’d be paying 98 cents on the dollar. [This may sound like an exaggeration, but likely isn't.] We left, and they lost out. No taxes at all. I don’t want to screw anybody out of anything, least of all the governments that I work with. We put 30% in holding until we sort it out.”

The story of the Stones’ flight from Britain because of taxes is told a bit more fully in the recent documentary Stones in Exile, which was quite good. (Shine a Light, meanwhile, was a disappointment.)

As much as I love Keith Richards – am reading his memoir Life, and loving it as much as the critics – the likelihood is that his bandmate Mick Jagger is more responsible for the band’s business strategies. He is, as we put it earlier here, a true profit maximizer.

(HT: Greg Mankiw) [%comments]

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  1. StandardsAreSkewed says:

    98% was and is ridiculous. That’s not an argument for abolishing taxes. It’s a give and take process that we need to constantly renegotiate. Smart, progressive taxation. Not “ridiculous overburdensome taxation” or “zero taxation.”

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  2. PT says:

    British taxes used to make a distinction between “earned” and “unearned” income, with the latter taxed at a higher rate. This included such things as rents, interest, dividends, and the royalty income of rock stars. It certainly went as high as 95%, as memorialized by the Beatles in “Taxman” – “..there’s one for you, nineteen for me..”. The tax on earned income, however, only briefly reached a high of 82%.

    One might reflect that the preferential taxation of unearned income in the US lately, which drove the explosive growth of unproductive financial speculation, contributed substantially to the economic situation in which we now find ourselves.

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  3. RifRafRob says:

    @PT #18,

    As a conservative I’m a bit ashamed to admit that I buy it. That’s the most effective indictment of Bush’s tax policy that I’ve yet heard.

    I’m no fan of the income tax but it seems to me like it’s a little bit odd to distinguish types of income. If we’re going to tax income shouldn’t we keep it simple and just tax it all the same? Why make extra work for accountants and tax lawyers?

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  4. DaveyNC says:

    Bob @ 14: See, here’s the thing. It’s not necessarily that we think the evil “rich” should be taxed less it’s that we realize that they have the means to leave and take their businesses with them. Especially in a time when capital can move across borders with the push of a few buttons and a good accountant. You and many others on the left seem to want to tax the “rich” simply because they have more $$. I’d rather keep them here, encourage them to build their businesses and give the rest of us decent jobs that help them to get richer. Because I’ll be better off for it.

    I met a man a year ago who was selling off all of his small businesses that he had accumulated over the course of his life. He had a DIY car wash, a couple of convenience stores, a self-storage facility and half a dozen rental homes in an upscale community. Altogether, he probably had $4-5 million in assets, that I knew of. He was liquidating everything to go to New Zealand.

    He wasn’t exactly a big employer, but he sure as heck paid a lot of property taxes here and clearly had the ability to accumulate assets and make them productive. New Zealand is the better for it, now.

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  5. DaveyNC says:

    Sbard@16: “pretty rich and successful” fairly describes the Stones, does it not?

    And these days, you really don’t have to be so wealthy to live on the move: http://www.vagabonding.net/

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  6. cavantim says:

    Heard The Stones might get back together in 2011. Remember when they were on The Ed Sullivan Show back in the 60s? – http://goo.gl/j25P

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  7. Eric M. Jones says:

    Two percent of the people own 50% of the wealth. Fifty percent of the people own 2% of the wealth. Get real.

    The Stones actually considered buying their own tiny country. But then they found they would have to pay for transportation infrastructure, government, postal services, public health, fire protection, security, insect control, etc., etc………..

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  8. Carl says:

    #2: You’re quick — but wrong — to blame this on the “Labour government of the 70s”. The 98% top marginal rate dates from the (at least) the 1960s and persisted through alternating Labour and Conservative governments.

    The 1966 Beatles song “Taxman” recorded [sic] this tax rate for posterity with the lines “Let me tell you how it will be;
    There’s one for you, nineteen for me” and the responsibility of both parties with the lines “Taxman, Mr. Wilson, Taxman, Mr. Heath”.

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