If you’re a Canadian fan of Bill Cosby, don’t expect him to perform his stand-up routine north of the 49th Parallel anytime soon, based on what he told one what he said earlier this month on Twitter:
Dear @jinkerjacket your Canadian Gov requires a huge payment from my earnings. You’ll have to view me tax-free here: http://bit.ly/CosbyApp
It is a commonly held belief that famous performers do not take tax rates into account when deciding where to go on tour. Mr. Cosby proves this to be incorrect. Actors and comedians are normal people like anyone else, and as such are influenced by tax competition. All things equal, areas with lower tax rates will receive more business than those with higher tax rates. This tax competition helps restrain the size of government because politicians realize that jobs and investment can cross borders (or not cross in this case) if they get too greedy and impose high taxes.
This is an important lesson for governments considering raising taxes on non-resident performers. Actors, comedians, and sports stars all might make a lot of money, but they still want to keep that money by avoiding high taxes. While it may seem like an easy source of tax revenue to politicians, it may just end up keeping their constituents from seeing the shows they desire.
One late night a couple of weeks ago, I watched Rolling Stones: Stones in Exile, a documentary released last year on the making of 1971’s Exile on Main Street and available in streaming form from Netflix. The early part of the documentary lays out why one of the quintessential British rock groups recorded arguably their definitive album in France. The Stones’ desire not to lose their earnings to the British government is a reminder that while Keith Richards has long said that the Stones and the Beatles were always friendly musical competitors, in many respects, the Stones served as a counterweight for some of John Lennon’s sillier and grandiose attempts to play to the rafters.
In 1967, Lennon swore that “All You Need is Love;” Keith later responded (and I’m paraphrasing here, as I don’t have the interview in front of me), “All you need is love? Try living on it sometime.”) And similarly, in 1971, Lennon as a solo artist wrote “Imagine,” in which he sang “Imagine no possessions.” Almost concurrently, the Stones were saying nuts to that — they left England and moved to France, where they recorded Exile, to avoid having their wealth confiscated by the rapacious taxation of high-earners by the British government.
Oh and speaking of Lennon’s longtime writing partner, Paul and his wife paid as much attention to the precepts of “Imagine” as multimillionaire Lennon himself, as Mark Steyn wrote a few years ago in the London Telegraph after the Live8 concert to (as best I recall the purpose of the concert), convince western governments to forgive Africa’s debt:
Seven years ago, you’ll recall, Sir Paul’s wife died of cancer. Linda McCartney had been a resident of the United Kingdom for three decades but her Manhattan tax lawyers, Winthrop Stimson Putnam & Roberts, devoted considerable energy in her final months to establishing her right to have her estate probated in New York state.
That way she could set up a “qualified domestic marital trust” that would… Yeah, yeah, yeah, in the immortal words of Lennon and/or McCartney. Big deal, you say. We’re into world peace and saving the planet and feeding Africa. What difference does it make which jurisdiction some squaresville suit files the boring paperwork in?
Okay, I’ll cut to the chase. By filing for probate in New York rather than the United Kingdom, Linda McCartney avoided the 40 per cent death duties levied by Her Majesty’s Government. That way, her family gets all 100 per cent – and 100 per cent of Linda McCartney’s estate isn’t to be sneezed at.
For purposes of comparison, Bob Geldof’s original Live Aid concert in 1985 raised £50 million. Lady McCartney’s estate was estimated at around £150 million. In other words, had she paid her 40 per cent death duties, the British Treasury would have raised more money than Sir Bob did with Bananarama and all the gang at Wembley Stadium that day.
Given that she’d enjoyed all the blessings of life in these islands since 1968, Gordon Brown might have felt justified in reprising Sir Bob’s heartfelt catchphrase at Wembley: “Give us yer fokkin’ money!” But she didn’t. She kept it for herself. And good for her. I only wish I could afford her lawyers.
Of course, if it seems amazing to see celebrities as arch-liberal as Cosby and Paul and Linda McCartney suddenly become fiscal conservatives when it’s their own money that’s on the line, it’s a reminder of Conquest’s First Law of politics, “Everyone is conservative about what he knows best.”
(Of course, when they start telling you what you should do with your wallet, watch out. Or just tune out.)