Songwriters Penalized in New Tax Bill… Almost Share Thisi
Historically, songwriters were exempt from Capital Gains rates on their taxes, meaning they had to pay the higher Ordinary rates when they sold their catalogs. The roots of these laws were based in the antiquated “Eisenhower Rules” from the early 1950’s. These exemptions for copyright holders were politically motivated, and fundamentally crafted to neuter Eisenhower’s campaign funding by penalizing his access to his book royalties.
These laws took on a life of their own, and extended to any copyright creator. They essentially caused songwriters who wanted to sell their catalogs to be “double taxed” at the higher rates … both while collecting their royalties and again when they sold their catalogs. These bizarre rules were carried through decades as unfair tax legislation for songwriters, authors and all kinds of creators.
In the early 2000’s, our friends at the NSAI and NMPA fought to have the laws brought back to a common fairness, and Congress adopted “The Songwriter Equity Act”, essentially qualifying songwriters for the lower Cap Gains rates. Further legislation later made this permanent.
Unbelievably, during the process of drafting the 2017 Republican-led Tax Reform bill, the Capital Gains issue reared its ugly head again in the songwriter world. Although it looks like this story is going to have a happy ending, it’s definitely worth noting what happened.
On November 2 when the newly proposed tax reform bill was released, a whole bundle of issues (like “The Songwriter Equity Act”) were put on the chopping block for repeal. This was an ironic turn of events as several Republican lawmakers were the ones responsible for it’s original passage.
Once again the NSAI and the NMPA came to the rescue and caught this issue. They went into emergency mode to make sure that that the language was removed from the bill and that songwriters would continue to be taxed fairly.
Purportedly, the language was removed before the Committee started looking over the bill.
How this relates to Hearts Bluff and the songwriter community:
We must remain diligent in protecting our rights.
These laws make a substantial difference for the writer community that wants to prosper from their life’s work and liquidate their royalties. This ensures that a songwriter will get the same equitable treatment than any businessperson or capital enterprise would get.