Harry
>
>
>THE WALL STREET JOURNAL
>
>November 29, 2005; Page A4
>
>Music to Songwriters' Ears: Lower Taxes
>Country Artists' Group Presses Lawmakers to Slash the Levy on Lyricists
>By BRODY MULLINS
>Staff Reporter of THE WALL STREET JOURNAL
>
>WASHINGTON -- 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.
>
>
>"This is just such a glaring injustice," says Bart Herbison,
executive
>director of the Nashville Songwriters Association International. The
>association, which represents about 30,000 songwriters, says members'
>average songwriting income of just $4,700 a year makes more advantageous
>tax
>treatment only fair.
>
>
>The songwriters' provision in the tax bill would apply to the sales
of all
>types of music, not just country songs. But the Nashville songwriters
group
>has pushed for the change, rounding up support from lawmakers representing
>Southern states such as Tennessee and Kentucky, among others.
>
>
>The songwriters' provision, which would cost the government about $4
>million
>a year, according to the group, is one of several obscure tax changes
>included in a $70 billion, five-year tax bill that Congress hopes to
>approve
>this year. Other provisions in the bill would increase the penalties
for
>bad
>checks, allow volunteers at charities to expense their mileage and
allow
>nonmilitary intelligence officers to skip paying capital-gains taxes
after
>selling their houses.
>
>
>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.
>
>
>
>Those tax rates make a big difference because the royalties songwriters
>otherwise receive for their work are relatively modest. A songwriter
makes
>8.5 cents each time his or her lyrics are sold on a CD, the association
>says, and even less when the songs are played on the radio. The new
>provision would apply only to sales of "song catalogs" --
collections of a
>writer's work -- and not to ordinary royalty income from individual
songs.
>
>
>Songwriters face another hurdle, according to the association, because
they
>must be paid royalties immediately after they are collected. Thus,
unlike
>an
>author of a novel, who could arrange to spread out his or her payments
over
>a number of years, a songwriter is more vulnerable to fewer, large
payouts
>-- and more of a tax hit.
>
>
>Five years ago, for instance, Liz Hengber, the author of Reba McEntire
hits
>"And Still," "It's Your Call," and "Forever
Love," sold her catalog of 200
>songs for an amount in the mid-six-figure range -- but paid more than
>$100,000 in taxes. "It sounds like a lot of money, but I haven't
had a hit
>since 2000 so that money has to last me," Ms. Hengber says. "When
the hits
>do come, we have to be like squirrels and bury the money."
>
>
>The Nashville songwriters association doesn't have paid Washington
>lobbyists, doesn't make political donations and doesn't take lawmakers
on
>trips around the country. But Mr. Herbison has built support by organizing
>more than 400 Capitol Hill visits to Washington during the past four
years
>for songwriters such as Ms. Hengber to make their case to every member
of
>the tax-writing committees in the House and Senate.
>
>
>"We bring songwriters up there with a guitar and a story to tell,"
says Bob
>Regan, the volunteer president of the songwriters association and a
>professional songwriter. He estimates that he spent nearly three weeks
in
>Washington this year talking to lawmakers.
>
>
>Mr. Regan, who says he got into songwriting because he "likes
playing in
>bars and sleeping in late," is the author of 800 songs. Ten of
his songs
>have become hits, such as "Busy Man" by Billy Ray Cyrus,
"Thinkin' About
>You" by Trisha Yearwood and "Til Love Comes Again" by
Ms. McEntire. When
>Mr.
>Regan sold his catalog of songs in 2000 for a figure in the high
>six-digits,
>he paid 39% in taxes.
>
>
>A few years ago, the songwriters association helped start a Songwriting
>Caucus in the House headed by Rep. Marsha Blackburn (R., Tenn.) and
Rep.
>Lloyd Doggett (D., Texas). This year, Sen. Lamar Alexander (R., Tenn.)
and
>Sen. Mary Landrieu (D., La.) founded a similar caucus in the Senate.
>
>
>The lawmakers introduced legislation in the House and Senate that would
>treat songwriters' sales as capital gains rather than ordinary income.
Rep.
>Ron Lewis (R., Ky.), a country-music fan and guitarist, added the provision
>to the pending tax bill during a committee vote. The provision isn't
in the
>Senate version of the bill, but backers are aiming to preserve it in
final
>House-Senate negotiations.
>
>
>"This is a business issue," says Ms. Blackburn, who represents
a district
>outside Nashville. "The chances are very good for this staying
in the final
>bill."
>
>
>One songwriter lobbying Congress to include the measure in the final
bill
>is
>Debi Cochran, who won an Emmy for her song that was played on the soap
>opera
>"General Hospital." She also is the author of the No. 1 hit
"My Kind of
>Girl," performed by Collin Raye.
>
>
>In all, Ms. Cochran has a collection of 300 songs that she refuses
to sell
>because tax rates are too high. To make ends meet, she sells handbags
at a
>Dillard's department store.
>
>
>"I have thought about bringing the Emmy to D.C. with me, and wearing
my
>name
>tag from my day job at the department store," Ms. Cochran says.
" 'This is
>how good I am,' I would say in my meetings, pointing to the statue.
'And
>this is what I do for a living,' I would say, touching my Dillard's
badge.'
>"
>
>
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