Tax and drugs and rock 'n' roll
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it certainly tempers my
sympathy when they bemoan the 'illegal' downloading and file sharing of their music........
Lets not forget the tax rates that caused them to flee...
This all came about because they owed a massive amount of tax to the UK taxman at crippling rates that they couldn't afford to pay and live as well.
They ended up fleeing to the continent so they could earn the money to pay the taxman.
In the process, they produced one of the truly great albums of the era "Exile on Main Street".
So obviously the taxman was just what was needed to get the creative juices flowing.
Well done Hector!
Get with it
Hector now long retired with top hat Civil service pension living ni Acacia Avenue Tunbridge Wells
now superseded by Moira Stewart and the like . .
Tax rates
Was it the tax rates or simply greed?
Since they were effectively bankrupt at the time due to outstanding tax bills and only left the country to make enough money to pay the taxman, it was tax rates.
Arguably later this became greed, but let's not get into the politics of envy.
?
Since they were effectively bankrupt at the time due to outstanding tax bills
That would suggest a rate in excess of 100%. Any rate less than 100% would have left them with something, so the bankruptcy would presumably be a consequence of spending money that was due to the Inland Revenue.
I understand that the popular beat combo U2 have an innovative approach to managing tax on their earnings. Innovative and legal, obviously.
Ah, those tax rates!
For those not old enough to remember, in the 1960s Harold Wilson's Government (I think it was) set the top rate at 95% on income - check out the lyrics to The Beatles "Taxman". With the Investment Income surcharge the marginal rate on unearned income was actually over 100%! No wonder suddenly high earning pop stars had to flee the country to survive. Greed didn't really come into it - if the Government said you couldn't keep a single penny of your income wouldn't you leave too?
Not over 100%
The top tax rate for income tax was 83% plus 15% investment income surcharge making a tax rate of only 98%.
Those were still the rates in force when I qualified in 1982
The top tax rate for income tax was 83% plus 15% investment income surcharge making a tax rate of only 98%.
Not in force in 1982
In 1979-80 the top rate of income tax was reduced to 60%
In 1988-89 the top rate of income tax was reduced to 40%
Thanks Peter. I stand corrected
I must have been dealing with personal tax assessments from 1978 and earlier when I started working in tax at Touche Ross in 1982. I did have some Lloyds underwriters as clients.
No problem
It's quite amazing that it took Margaret Thatcher so long to reduce the rate from 60% to 40%.
In fairness to "The Blessed Margaret"...
It's quite amazing that it took Margaret Thatcher so long to reduce the rate from 60% to 40%.
In fairness to "The Blessed Margaret", we were going through a rather bitter economic crisis at the time. I recall the period from the end of the long summer of 1976 - to the end of the miners strike in March 1985 as being a rather grim time, both culturally and economically.
There were simply, other priorities...
It took until 1988 before we had a budget sufficiently stable to support a tax reduction of that magnitude, even then it might have been too much too soon.
Other priorities?
I can never understand this argument about priorities. I understand that I have to have priorities because there is one of me and I have to do all the work so I keep a list of what order I am planning to do client work but with government it should be possible to do most things subject to parliamentary time.
The budget issue is different. I think after years of overspending by governments and individuals it is madness to encourage both to spend more. Blaming it on the banks for not lending to people is madness too. The problem has been the banks had been lending too much.
I would think the obvious problem we have is because we pay people to not work. Another problem is NHS spending. We increased NHS spending by a massive amount for a relatively little improvement in health care. We also seem to be encouraging young people to study in areas that are not going to help them to get jobs. I don't think that all study needs to be vocational but if people are taking courses that don't seem to be benefiting them in any way we need to rethink, especially at the same time employers can't get adequate employees.
After years of avoiding the pension problem at least this government has made an effort to encourage people to face up to reality. Sooner or later a government will face up to the fact that people need to work and not make it illegal to employ people under a certain wage and continue to discourage people to look for jobs by paying them benefits. I don't understand the point of child benefits either.
If everybody was working there would be no need for such high rates of income tax, NICs and VAT.
We are all rock stars now
The typical showbiz tax problem is that someone who was enjoying a modest lifestyle starts enjoying success. The cash rolls in. The lifestyle changes. Big houses, big cars, big holidays...
Then reality kicks in. The tax bills arrive. Lo and behold, the money is all spent. Result bankruptcy.
Over the so called boom years, the UK* populace, who had enjoyed a modest lifestyle, started enjoying the illusion of success, fuelled by free and easy credit. The cash rolled in. The lifestyle changed. Big houses, big cars, big holidays...
Then reality kicked in. The credit card bills arrived. Lo and behold, the money was all spent. Result bankruptcy. So we are all rock stars now.
But we really can't get no satisfaction unless we just get our heads down and work our way out.
(*for UK, also read 'Greek' or 'Spanish' or 'Irish' etc)
But as in all walks of life...
some of us are 'more*' rockstar than others....
(* - Mr Normal who loses his house having been made redundant but went for maximum mortgage to live where he wanted....bankruptcy....then accepts benefits or lowly paid job.....hopes to one day own his home again
vs Mr Real Rockstar...sell millions of records earning millions of pounds buy numerous properties to build empire, market goes pop....bankruptcy.......start doing gigs and selling records again....rock on! back to rockstar status)
We are all equal....but some more equal than others......
Actual rate?
Back in the late 60's (although I hear if you can remember them you weren't there) the highest rate was 19/3d in the £ as a combination of income tax and surtax (for you young ones 96.25%). You did get earned income relief at 2/9th and 1.9th but only on a relatively small part of your income. George Harrison's tax man - 19 for me 1 for you was actually understating the tax take. Of course people tried to convert income into gains (as did Tom Jones and Englebert Humperdink in the Constellations Investments case - probably the first publicised tax avoidance scheme - selling the rights to their future income and so giving birth to what became chapter 4 of ITA2007 - sale of occupation income - read that and weep if you have an IR35 company and hope HMRC don't remember that one when you extract profits from it on liquidation!) because gains were only taxed at 30%, but becoming a tax exile was, for many entertainers, their only method of avoiding these high rates of tax.
But the real fame for a rocking tax exile must go to Dave Clark (Reed v Clark) who showed how to make $500,000 disappear by moving from the UK - liability on a P/Y basis to the USA - liability on a C/Y basis - and who remembers Dave Clark and the Dave Clark 5 today? Only accountants.
In fact if you had investment income the highest year for tax was 1967/68 when a special charge was imposed which increased the highest marginal rate of tax to 130%.
Marquee?
It was indeed the Marquee club where Mick Jagger and the Rollin' Stones played their first gig standing in for their friend and mentor Alexis Korner (whose drummer they would subsequently nick) - however I first saw the band in May 63 at Ken Colyer's Jazz Club - Studio 51.
Satisfaction
http://www.youtube.com/watch?v=Yon18DBsU_c
A very good, not to mention pretty different, version of the Rolling Stones's "Satisfaction".
OK, so it's got nothing to do with this thread, but justsotax's comment, not to forget andrew-hyde's, and others, got me thinking....
Dave Clark 5
Considering what rates were in the 60s we should perhaps be Glad All Over that they are slightly lower now. Legislation was easier to understand back then. It's all Bits and Pieces now. You can read it Over and Over and still not understand it. Perhaps the answer is Everybody Get Together and protest. Or perhaps emigrate and just say Catch Us If You Can.
(Sorry. I couldn't help it.)
Dave Clark 5
Well done Andrew (a Tottenham lad perhaps? Royalty Southgate?) - I didn't dare!
Rolling Stones
I had always thought that their first gig in essentially their line up under which they became famous was at the Station Hotel, Richmond - now an Irish bar. The Marquee Club was a famous venue then so it does seem highly unlikely that they played their first gig there.
No
The first gig with the "original" lie up would have been the Station Hotel in Richmond, if we accept the original line-up as being Brian, Mick, Keith, Charlie, Bill and Stu (Ian Stewart the boogie-woogie pianist who was the sixth stone and a great bloke to boot - RIP Stu) but the band's first gig was the Marquee where Alexis Korner's Blues Incorporated had a residency, Alexis had a date at the BBC and so needed a band to fill in at the Marquee - it is documented quite well in the August 2012 edition of Mojo magazine as well as the various books which assorted stones have produced. The Marquee really wasn't a famous venue at the time any more than Studio 51 or the Flamingo or the 100 Club.
Not a suggestion I would agree with
"That would suggest a rate in excess of 100%. Any rate less than 100% would have left them with something, so the bankruptcy would presumably be a consequence of spending money that was due to the Inland Revenue."
I wouldn't agree that it would suggest a rate in excess of 100%. A lot of people spend money on food and rent rather than pay their tax bills. I'm sure the Stones spent money that could have been used to pay tax.
Exactly
It wasn't the tax that caused them to be "effectively bankrupt", as I read the previous post to suggest, it was spending more post-tax income than they actually had. Anyway, purely academic and I am not a fan anyway,
frustratedwithhmrc wrote:
Since they were effectively bankrupt at the time due to outstanding tax bills
Exactly???
The problem then was the preceding year basis - you were not taxed on the income you earned in the year but the income of the previous year, however if you had a year where there was a dip you could end up with tax currently payable which was more than the amount you were currently earning exacerbated by the ludicrously high marginal rates that applied at that time. Add to that a management "team" which consisted of Allan Klein and it is very little surprise that Mick and the lads had to leave the UK - they had excellent advice (but not from Allan Klein) and were earning income globally - so it made sense to leave the UK. If M. Hollande introduces a 75% tax rate watch how many more French bankers and others discover that London is a convivial place to live. It is not purely academic because it is a symptom of any tax system which charges punative rates of tax, as some on the left of the political spectrum will still dearly love to do. Although tax avoidance activity will never disappear at any rate, the amount of the activity increases in direct proportion to the marginal rates charged. When was the level of avoidance activity at its lowest - probably when Thatcher's government charged both income tax and capital gains tax at 40%...
Rolling Stones First GIG S
Sinon old darling.
The first SERIES of FORMAL gigs by the Stones then composed of Jagger , Richards , Wyman , Jones ( RIP) and Watts was at the
Craw Daddy Club
in Richmond .
I know . I was there -- once at least !!I