U2 tax move

[Tennis05]

I know this is an old story, but it is still a hot issue brewing on every youtube page that has a U2 video on it, and I can't ignore it.

Let me start by saying I am a huge U2 fan. They are the reason I love music so much. They are still far and away my favorite group and have been ever since I first heard "Beautiful Day" in 2002. I have found a majority of other artist I enjoy through their songs and interviews.

To the best that I can fathom it they have had the largest pop culture effect on my life.

I am a huge Bono fan as well. He has inspired me to become an International Affairs major, to work in college NGOs, and to even travel to Africa. I know that he himself gives a lot of money to this cause. I listen to him, and I am convinced he is not a phony and that is genuinely committed to his cause and a person who follows their heart and their faith in God.

So will it may sound like I am one of those people that perpetuate the so-called "U2 myth," I genuinely believe in these four bandmates and what their music stands for. However, I am unsure of how to look at this tax move issue.

I defend every single U2 album and have always believed they did even their most commercial-friendly music for the love of music and not for money.

I defend a majority of their business moves. I think it is naive to think that the industry won't squash young talent that isn't good at the business aspect of the music world.

I defended their move to put themselves in the Ipod commercial. I enjoyed. I thought it was an innovative way to reach the audience in a post-radio media world. I never bought the argument that it was "selling out." The arguments in that whole concept are pretty stupid in my mind anyway.

I defended them when people ranted about their ticket prices saying that it was somehow all about the money for them. The cost of a U2 ticket is still so much less than many other arena acts. The truth is they could easily charge upwards of a $150 a ticket for the worst seats in an arena. Many older acts do just that. Plus, I paid just as much for the U2 concert as I did for a Bruce Springsteen concert and if Springsteen is charging it I'm convinced it's a good, honest deal.

That's why I am so confused about this tax move deal. It just doesn't seem like them talking when they defend it. It sounds like the kind of business venture that The Clash or the Sex Pistols would rail against, two of U2's main influences.

The bottom line is this in economic terms. Bono has asked the Irish government to spend more on aid for Africa. U2 has opted out of paying more taxes. In order for Bono's goal to be met some other taxpayers will have to foot the bill. Bono asks for a tax increase while decreasing his own tax input. That doesn't set a very good example no matter how much Bono may add to make up for it.

Bono often talks about how the Irish don't like super celebrities because their culture has a long history of suppressing megalomaniacs. This makes U2 business-first rationale hard to understand for me.

It doesn't even need to put in an economic light, however. Songs might say more. I guess in the end I cannot imagine the protagonist in "Van Diemen's Land" singing fondly of this business move. It doesn't seem to be what U2 have ever been about.

Anyone have any thoughts? I don't think U2 meant to screw taxpayers, and I do believe Bono when he says he wouldn't ask people to do something he wasn't up to doing himself.

I don't want to believe that U2 have taken on the hurtful and disgusting practices of the super-rich that we see from so many rock stars. Does anyone have another angle on this story that might put it in a different light?

 

[thelaj]

No-one likes paying tax mate, no matter how much they earn.

I am not entirely familiar with the law but wasn't the tax-allowance for artists removed?

If I thought my tax was going to the right places I wouldn't mind paying it - instead it goes on bureaucrats and politicians "expenses".

 

[Zoots]

 

[BVS]

Here's one thread about it, I'm sure there have been others.

http://forum.interference.com/showt...perpage=15&highlight=u2 tax move&pagenumber=1

To me I think it's a dumb issue to get upset about

 

[david]

Oh that greedy U2. They'll get their commuppance someday.

 

[Tennis05]

You say no one likes to pay taxes, but Bono has asked Irishmen to pay more. It isn't about what people like to do.

 

[Liesje]

How is this "hurtful"? It's not like they're doing anything illegal. Hell, if there was a way for me to pay less taxes, you bet I'd be game! Also, I really doubt this was Bono's decision. I really doubt the band had much to do with it at all. If I was rich and famous, I'd have much better things to do than my own taxes and accounting. And even if Bono is being hypocritial about it, he only makes of 1/5. Maybe the other 4 are all for it...

 

[gvox]

I think Tennis has some great points, to be honest, and I hope noone gets silly in this discussion. I also think it's very naive (no offense Lies) to believe or suggest that a. the rest of the band don't support or believe in the principles that Bono fights for (because they do, they've publicly said so) or b. that each member of the band is not intimately involved with the business side of the band, because it's fairly widely accepted fact that they are. They would not be unaware of this move, I just can't believe that at all.

I don't fault them for it, but it is probably the single contradiction, if you will allow that term for lack of a better one, that has sortof bothered me a bit. Not bothered me as in I'm losing faith in them over it, but...

It is sortof 'hurtful' in the sense that there is now that many less millions of dollars in Irish tax money that *could be diverted to aid. I say *could, because of course U2 can't control how the Irish tax dollar is spent...if this is a way for them to make a statement to the Irish government, then, I can't say I blame them. Unfortunately though, the average person doesn't have the luxury of making such a statement by refusing to pay taxes.

Anyways, thanks for your thoughts Tennis, I thought they were eloquent, respectful and well-presented.

 

[U2387]

First, please bear with me, this will be long, but we have to set the record straight. PLEASE READ THIS.Well, the way I heard it, and I could be wrong, is that it was their producers, U2 LTD, who have the rights to the U2 catalog, that made the decision to do this. It was not Bono, Edge, Larry or Adam. They have enough money to pay others to run their affairs! However, they were left defending the move and I am sure it did not bother them, as it would not bother any of us, to pay less taxes. The real issue is, in my opinion, governments. The Netherlands should close the loophole. As long as there are loopholes, rational people will take advantage of them. As much as I would like to get pissed at companies here in the US for taking their profits and moving them to shell companies in the Cayman Islands, I have to hold back and reserve my anger for the politicians and lobbyists who get these laws passed in the first place. Anyways, back to the question at hand, I do not really fault U2 or Bono for defending this move. Here is why:

1.)The band makes most of their money outside of Ireland, so it is perfectly reasonable, from a business perspective, to take money made everywhere and base the company that handles that money in the most profitable environment. Tennis 05, you seem to understand well that U2 is a business, all musicians who sell their music are business people and the purpose of a business is to make money.
2.)This company only accounts for 1/3 of U2's total income. That leaves millions of dollars that are earned by Bono, Edge, Larry and Adam subject to income taxes in Ireland. These are much higher than in the US: there are only 2 brackets, and unlike in the US where you are exempt up to around 25K for a family of four, you start paying income taxes at a rate of 20% at your first dollar of income, then there is only one more bracket of 41%. Overall, you pay a much higher effective income tax rate in Ireland than in alot of countries, particularly the US. Also, Bono's venture capital company and hotel in Dublin is taxed, as are their recording studios there and all of their purchases are subject to a national sales tax of 21%. The Ireland is a low tax country argument is largely untrue. Most income is taxed very heavily. They get the low tax reputation due to their 12.5% corporate tax rate, about half the EU average, and much less than US top rate of 35%. You read about that alot in magazines, etc because alot of tech companies are now over in Ireland. U2 makes alot more money than other people in Ireland and therefore, contributes plenty of tax money to the government, rest assured. Bottom line, no U2, Ireland has alot less money to work with, both for Aid to Africa and other purposes.
3.)"Some other tax payers will have to foot the bill"- If U2 did not pay the taxes they continue to pay in Ireland, everyone would be footing alot more of the bill. More importantly, Bono advocates an increase from about 0.7% to about 0.9-1% of total economic output in aid. That is miniscule and will not necessitate any kind of significant tax increase. It is about reworking priorities, not having to tax or spend more necessarily. For example, Ireland I'm sure subsidizes plenty of foreign corps that could stand on their own, just like we do here in the US. Just eliminating one of those subsidies could get them there. That is the whole premise of the ONE campaign and the G8 commitments, etc. It shows how we do not have to sacrifice a significant amount of our individual or national income to have a lifesaving impact on billions of people. Bono is asking no individual or country to go broke over this. When every wealthy country just gives this small amount, it goes so far without sacrificing our standard of living. The impact is much larger than a few people or countries giving alot and winding up broke or having to tax themselves silly.Now If you are looking for a real nut who advocates individuals and countries going broke for this w/no results, google Peter Singer. Also, it is likely that people would be paying more in the long run without this targeted, focused aid that is being given out now. The aid in the millenium goals has corruption controls and is focused on schools, jobs, medical care and trade. Just getting a healthy, educated, economically productive Africa more than makes up for the aid we give them now in the long run. All new trading partners. There is a thread somewhere on interference where Bono explains how the trade will self finance the aid we give them now and wind up being a net benefit for wealthy countries. Bono's stated goal is to make aid unnecessary later through smart policies now. That is the whole mission of DATA. "Love is justice not charity" -U2 Mercy Bottom line here: the people who are saying Bono asks us to give all our money to Africa and then will not pay up himself are completely and totally wrong. He does not advocate giving up all our money, and he does more himself, in terms of time and money, than any self righteous reporter looking for the next big hit piece on someone.
4.) The Netherlands gives a significantly greater percentage of aid to Africa than Ireland.

Always, always remember, it is easier and it sells more newspapers to bash someone instead of bothering to check the facts. It is our job as citizens to educate ourselves and not let the media do it for us. They can exist and make money, sure, thats fine, but dont take their word as gospel. For example, look what the media did w/ this presidential race- Joe Biden and Bill Richardson were the best candidates in either party and we are left w/ this Hillary/Obama soap opera because the media wanted it! McCain is just Bush 2. And this is who we get to choose from!

 

[gvox]

U2387 that was a great post as well. There are always many sides to a situation like this, and you sharing all that info helps me understand this a bit better. Not doubting you, but do you have any links, in particular about the U2 LTD thing or the proportion of their income that company represents?

The only thing that really stood out negatively to me was "As long as there are loopholes, rational people will take advantage of them". I agree, but said people also have the choice whether or not they feel it will be ethical - or, even less severe perhaps, a 'good example' - for them to pursue that loophole, if you see what I mean.

Like I said tho, great post, wish more threads could go this way!

 

[U2387]

U2387 that was a great post as well. There are always many sides to a situation like this, and you sharing all that info helps me understand this a bit better. Not doubting you, but do you have any links, in particular about the U2 LTD thing or the proportion of their income that company represents?

The only thing that really stood out negatively to me was "As long as there are loopholes, rational people will take advantage of them". I agree, but said people also have the choice whether or not they feel it will be ethical - or, even less severe perhaps, a 'good example' - for them to pursue that loophole, if you see what I mean.

Like I said tho, great post, wish more threads could go this way!

Thank you very much! This thread is going very well. The 'rational people..' part was looking more of a realist or cynical view-competitors do it, so U2 has to type thing, etc. Thats why I dislike loopholes, people who want to do the right thing sometimes find they can not given the fact that it will put them at a disadvantage in a ruthless industry, which the music industry is. However, I agree with you totally in that people have a choice not to use them! I guess I would hold a corporation who sets up in the Caymans to avoid payroll taxes, etc in a lot worse light because they kill jobs, and in many cases, all of their profit goes untaxed for no legitimate reason whatsoever. Though I may not do it myself, U2 not earning most money from royalties in Ireland and not paying setting up that company in Ireland seems more justifiable than some other moves that people make! A couple of links, sorry if they do not work:

U2 Ltd info: http://www.usatoday.com/life/music/2007-10-26-3234737986_x.htm
-LTD in general, note how the 4 members left after this move. This article also does a good job of describing how many venutres the band is involved with that dont involve royalties from past work. This shows how they have income from other sources that they pay taxes to Ireland on.
1/3 of income:http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2006/08/08/nbono08.xml
-Thank you again for asking me to clarify!

 

[last unicorn]

First, they still pay a lot of taxes in Ireland.
Second, they are not the first and only ones to make that move. There is nothing illegal about it, no one wants to pay more taxes than necessary.
Third, since they payed no taxes at all in Ireland before this law was changed, they pay more taxes now in the Netherlands than they did before, no matter how low the Dutch rate might be.
Forth, The Netherlands are actually one of the few countries that meet the Development Millenium Goals.

 

[U2girl]

It was a business move, and moreso, their response to the Irish government for not supporting artists tax-wise anymore (and it's not like they don't still live and work in Ireland). But can anyone honestly say they never tried to pay as little tax as possible ? It's just that the rich (and famous) people have more options.

If I remember right, under the new law in Ireland, it was a 45% tax rate on one third of their income (the royalties). But I guess the samaritans of today ought to be stupid about their financial affairs.

 

[Liesje]

I think Tennis has some great points, to be honest, and I hope noone gets silly in this discussion. I also think it's very naive (no offense Lies) to believe or suggest that a. the rest of the band don't support or believe in the principles that Bono fights for (because they do, they've publicly said so) or b. that each member of the band is not intimately involved with the business side of the band, because it's fairly widely accepted fact that they are. They would not be unaware of this move, I just can't believe that at all.

Right, but for me the two are so far removed....I mean, when I went to Africa and was holding babies in orphanages, the LAST thing I was thinking about was my next tax return and who/what/where I was going to file. Likewise, when I filed my taxes I was not thinking about what that says about my humanitarian principles.

I'm not sure I'd agree that every member of the band is so intimately involved in their business. Ultimately, they can say yes/no, but I really doubt they were the ones initiating the move and researching the pros/cons of staying or going.

Besides, the Netherlands has played a significant role in U2's career and as GG says, they actually DO do what Bono, et al, are advocating for.

 

[gvox]

The Netherlands are actually one of the few countries that meet the Development Millenium Goals.

This is a very good point!

 

[Galeongirl]

First, they still pay a lot of taxes in Ireland.
Second, they are not the first and only ones to make that move. There is nothing illegal about it, no one wants to pay more taxes than necessary.
Third, since they payed no taxes at all in Ireland before this law was changed, they pay more taxes now in the Netherlands than they did before, no matter how low the Dutch rate might be.
Forth, The Netherlands are actually one of the few countries that meet the Development Millenium Goals.

Exactly. I really do not see why this is such a huge issue with people.
My first reaction was, who gives a damn.
In ireland they already pay plenty of tax, and Bono doesn't ask you to pay more, he wants the government to SPEND the tax wisely.
In Holland they still pay tax, but the tax in my country is spent more on the developing countries than Ireland.

 

[ntalwar]

2.)This company only accounts for 1/3 of U2's total income. That leaves millions of dollars that are earned by Bono, Edge, Larry and Adam subject to income taxes in Ireland. These are much higher than in the US: there are only 2 brackets, and unlike in the US where you are exempt up to around 25K for a family of four, you start paying income taxes at a rate of 20% at your first dollar of income, then there is only one more bracket of 41%. Overall, you pay a much higher effective income tax rate in Ireland than in alot of countries, particularly the US.

The band members probably spend fewer than the minimum number of days per year in Ireland to be considered tax residents. The Ireland revenue website has the "number of days" rule. If you notice, they spend more time outside of Ireland than in it within any given calendar year. So I doubt they pay full federal income taxes. On tour, they spend fewer than 120 days in the US (within a calendar year) to avoid paying federal tax for that reason.

 

[last unicorn]

^But I think that is only true when U2 are on tour. When they're not, they spend the majority of their time in Ireland. Not as a band, but as individuals and Irish residents.

 

[ntalwar]

^But I think that is only true when U2 are on tour. When they're not, they spend the majority of their time in Ireland. Not as a band, but as individuals and Irish residents.

I don't know - it seems like they spend several months in France and the US as well.

 

[gvox]

They actually spend more time in Canada than anywhere else....we just don't let on...

 

[U2387]

The band members probably spend fewer than the minimum number of days per year in Ireland to be considered tax residents. The Ireland revenue website has the "number of days" rule. If you notice, they spend more time outside of Ireland than in it within any given calendar year. So I doubt they pay full federal income taxes. On tour, they spend fewer than 120 days in the US (within a calendar year) to avoid paying federal tax for that reason.

See the post by last unicorn. If you live there, you pay the taxes there. Even on tour, their families still live in Ireland and the majority of their outside business ventures are run out of Ireland. They are probably considered full time residents, and if not, their families are.

 

[65980]

They actually spend more time in Canada than anywhere else....we just don't let on...

If that were true, they wouldn't have enough money to buy the plane tickets home! Welcome to Tax-ada... er, CANada, where we'll take 35% of your middle-class income and then charge you 15% sales/GST tax on top of EVERY SINGLE COMMERICAL PURCHASE YOU MAKE.

But anyway, this thread is interesting but unnecessary in my opinion. In the first place, Bono does not equal U2, and Bono certainly does not equal the U2 financial project. The fact that U2 still exist as the same 4 guys and manager after 30 years is evidence of how each doesn't let his ego and vanity get in the way of the band. Whether praise or criticism, Bono gets the brunt of it, and everybody in the U2-camp knows it. Bono accepts that and gets on with it. He's quite willing to take his lumps and defend decisions -- good or bad -- made by his bandmates or their financial team or manager. For all we know, he opposed this tax remove, or maybe he initiated it. Whatever. In whatever case, the U2-team will close ranks and defend each other.

Which brings me to my 2nd point: Bono is trying to educate people about the plight of the 'Third' World. He's not trying to become your idol. The fact that you may lose respect for him over the tax remove (which, as I said, may have nothing to do with him personally) shows that you have missed the point of what his work is trying to do. It's not about hero-worship. Whether or not you like Bono is irrelevant to Africa's plight.

Finally, and most importantly, I don't think other people's financial affairs are fair-game on a discussion board. Let's leave that private. It's not part of U2's public life.

 

[U2387]

Also, ntalwar, the fact that you are on a business trip i.e. a tour and staying in hotels does not mean you have foregone residency. That is referring more to second homes and primary homes and trying to treat the secondary as a primary for tax exemptions or credits and the like. If Bono and the boys spent all their time in Southern France, that would be an issue, but it is not, as the majority of their time is spent as private, modest citizens in Ireland.

 

[ntalwar]

Also, ntalwar, the fact that you are on a business trip i.e. a tour and staying in hotels does not mean you have foregone residency. That is referring more to second homes and primary homes and trying to treat the secondary as a primary for tax exemptions or credits and the like. If Bono and the boys spent all their time in Southern France, that would be an issue, but it is not, as the majority of their time is spent as private, modest citizens in Ireland.

Bottom line - we don't know how much income tax they pay. There are so many tax havens out there that other wealthy Europeans use - at least a half dozen in Europe alone.

More info here:

http://hubpages.com/hub/Rolling_Stones_Prove_Tax_Cuts_Work

Unlike the average person (including wealthy people) who live an work within a single nation, people like the members of the Rolling Stones and U2, are global performers who work in numerous nations, each with their own tax laws, and are thus subject to a multitude of different tax regimes. However, being global gives these people some additional options. A worker in a single nation can only respond to changes in marginal tax rates by increasing or decreasing the hours they work. However, in addition to increasing or decreasing the hours they work, global workers (especially entertainers like the Rolling Stones and U2 who perform all over the world), can continue to work the same number of hours per year but can save on taxes by increasing or decreasing the amount of time they spend (and thus how much they earn) in different countries. Being global, it is also relatively easy to shift their domicile (where they have their permanent address) to a low tax country and invest their savings in a low tax country.

From the point of view of taxing authorities in the various countries, when a global worker deliberately limits the time spent each year living and working in the country, the result is the same as a resident worker reducing the number of hours spent working. In each case income generated in the country is less than it could be and the amount of taxes generated on that income are also reduced. Accomplishing this requires a certain dexterity on the part of the global worker. First is the issue of their domicile. Simply buying a home in a country which either doesn't have an income tax or has one with low marginal rates and listing that as your permanent address won't work. To save on taxes, one has to become a tax exile meaning that they have to exile themselves from their homeland for a good part of the year – in the United Kingdom if one spends more than 90 days per year in the country they lose their tax exile status. The French are a little more lenient in that they allow tax exiles to spend up to 182 days per year in France. Next, there is the issue of time spent working in each country. Recognizing the demands of the global economy, most countries attempt to differentiate between occasional workers, like consultants and performers and those foreign workers who spend longer periods working in the country. The occasional workers usually get tax breaks that are more generous than those more permanent workers receive. To maximize their revenue generating performance time in the U.S. groups, like the Rolling Stones, fly to Canada for rehearsals and breaks during U.S. concert tours. Of course, limiting the length of the concert tour reduces the supply of concerts meaning that not only are there fewer opportunities for their fans to attend a live concert but, due to the reduced supply of live appearances, the cost to those who are able to go is higher.

 

[U2387]

Bottom line - we don't know how much income tax they pay. There are so many tax havens out there that other wealthy Europeans use - at least a half dozen in Europe alone.

More info here:

http://hubpages.com/hub/Rolling_Stones_Prove_Tax_Cuts_Work

Yes, but they are not tax exiles under this definition, they live and pay taxes on income in Ireland. This article does not address whether or not staying in hotels qualifies one as a tax exile. Of course, we know there are plenty of tax havens out there, but that is irrelevant for this thread. What is relevant is that we know:
1.)Most of U2's money does not come from U2 Ltd, which moved to the Netherlands
2.)Whatever the amount, U2 reports plenty of income and pays plenty of taxes to Ireland. See the sites I linked last night in another response.

Also, this article is a little unrealistic. To say that average, non wealthy workers change their hours w/ marginal rates is pure anti tax propoganda. Most workers do not control the number of hours they work, and even if they did, little tweaks in marginal rates do not mean a damn thing, it is effective rates, the percentage you actually pay in overall income, usually much lower, that actually counts. Same goes for businesses-unless you are someone like the Stones , you have constant competition, etc, and if you shut down or moved out when taxes got to be too much, your competition would quickly pick up the slack and even with the bigger tax bite, wind up with a hell of a lot more than when you woke up that morning. I know the Stones do the Canada thing, do you have any links about U2 doing this?? I know they stay at hotels in US cities and they have had rehersal sessions in America many times.(Zoo TV in particular) I know they rehearsed some of Vertigo in Vancouver, but they also did some rehearsing in Europe and America as well. I do not think U2 actively tries to minimize their time in the United States, but feel free to prove me wrong.

 

[Rachel D.]

Well, if Bono wasn't doing what he does for Africa, this wouldn't be such a big deal to people. It's mostly people who don't know much about U2 who are still tyring to make hay out of this. They use it as an excuse to dis Bono. Just because Bono campaigns to help the poor doesn't mean that the whole band and their organization should dish out more money to the government than they have to, especially when the Netherlands gives more to the needy than Ireland.

 

[ntalwar]

1.)Most of U2's money does not come from U2 Ltd, which moved to the Netherlands
...
I know the Stones do the Canada thing, do you have any links about U2 doing this?? I know they stay at hotels in US cities and they have had rehersal sessions in America many times.(Zoo TV in particular) I know they rehearsed some of Vertigo in Vancouver, but they also did some rehearsing in Europe and America as well. I do not think U2 actively tries to minimize their time in the United States, but feel free to prove me wrong.

I don't know the name of their touring corporation or where it's based, but most acts have one in order to minimize liability among other things. E.g. if someone falls off the ellipse, they can't sue the individual members for millions.

U2 does the Canada/Mexico runners to stay under 120 days - the tour forum has plenty of examples of the band crossing the border before midnight, right after a show. When they kicked off in So. Cal., they stayed in Mexico for example.

 

[gvox]

Also, ntalwar, the fact that you are on a business trip i.e. a tour and staying in hotels does not mean you have foregone residency.

Ha! Try telling that to US Homeland Security, Customs, INS, or whatever the hell it is they call themselves these days!!

 

[gvox]

If that were true, they wouldn't have enough money to buy the plane tickets home!

Not to get into the whole tax issue, because it's no secret we get taxed up the ass, but you do realize that they have a good tie to Canada, right?

Finally, and most importantly, I don't think other people's financial affairs are fair-game on a discussion board. Let's leave that private. It's not part of U2's public life.

I have to disagree here. Not saying that I believe that they are necessarily doing wrong, there have been some very good facts raised that have reshaped my view of it a bit, but I don't think it's unreasonable to discuss this. We're not really talking about their personal finances, we're talking about the company, and any company's business is fair game, of course it is.

 

[gvox]

I do not think U2 actively tries to minimize their time in the United States, but feel free to prove me wrong.

I think we need to move past the 'who knows more than who and can prove what' type of vibe. If you don't believe that they do this, fine, your perogative. But they did.