October 29, 2010
Keith Richards Schools Bill Gates, Senior

Or would if the elder Gates, who is the spokesman for an income tax initiative here in Washington state, were listening.

The Stones are famously tax-averse.  I broach the subject with Keith in Camp X-Ray, as he calls his backstage lair.  There is incense in the air and Ronnie Wood drifts in and out--it is, in other words, a perfect venue for such a discussion.  "The whole business thing is predicated a lot on the tax laws," says Keith, Marlboro in one hand, vodka and juice in the other.  "It's why we rehearse in Canada and not in the U.S.  A lot of our astute moves have been basically keeping up with tax laws, where to go, where not to put it.  Whether to sit on it or not.  We left England because we'd be paying 98 cents on the dollar.  We left, and they lost out.  No taxes at all.  I don't want to screw anybody out of anything, least of all the governments that I work with.  We put 30% in holding until we sort it out."  No wonder Keith chooses to live not in London, or even New York City, but in Weston, Conn.

As economics professor Greg Mankiw would say, people react to incentives, including taxes.

Cross posted at Jim Miller on Politics.

Posted by Jim Miller at October 29, 2010 07:49 AM | Email This
Comments
1. Maybe Keith likes it in Weston. Otherwise it would be a pretty dumb personal choice for one of the richest people in the world to choose where to live based on taxes. Does he choose where to eat based on where he can get the cheapest food, or whom to marry based on who can help him pay his bills?

Then again, according to the conservative taxfoundation.org, Connecticut's state/local tax burden is 3rd highest in the US. Maybe Keith should consider moving to Washington, which ranks 35th.

Posted by: Bruce on October 29, 2010 08:23 AM
2. "Otherwise it would be a pretty dumb personal choice for one of the richest people in the world to choose where to live based on taxes. Does he choose where to eat based on where he can get the cheapest food, or whom to marry based on who can help him pay his bills?"

Rich people did not become rich by being careless with their money. The stereotype of the carefree rich dude throwing money away and buying the most expensive things possible only exists in the imagination of jealous people. The people who act like that do not stay rich for long.

Posted by: Brian on October 29, 2010 08:32 AM
3. Bruce-
I'm 100% sure that Keiths accountants know a lot more about this than you do. You'll have to pardon me if I believe the guy with the money at stake more than the guy with an political agenda to promote. (And I really doubt the old rocker is a teapartier.)

Lesson to the left: When you want to engage in class warfare, you have to remember the other side will defend and even counter attack, and private accounts are smarter than government bureaucrats.

If wealthy people get the feeling they are being punished for being productive, it is remarkably easy for them to "move" themselves elsewhere at least on paper to sidestep high taxes.

Posted by: johnny on October 29, 2010 08:42 AM
4. Brian@2 writes, "Rich people did not become rich by being careless with their money."

That is indeed true of many rich people, but really, Keith Richards? I'm sure he was very frugal in purchasing his home in high-tax Connecticut. And his home in England. And his home in Turks & Caicos. And his heroin....

Posted by: Bruce on October 29, 2010 08:48 AM
5. I heard someone on the radio suggest that we should cap all taxes at 60% for those earning $1M a year. Let's say we live in a magic land where this could be done (given that sales, property, income, business, payroll, etc. are all disparate). It's possible that this person lived near poverty for 4 years while working 80+ hours a week building a business that finally paid off with $1M taxable income. Factor the $400K after-tax over the 5 years that it took to earn it, and it comes to $80K per year. Also realize there is no guarantee that this business will ever make this much again. And let's not forget the risk factor - less than 10% of new businesses actually make it to 5 years. So with risk factor, we're looking at $8K / year. Who in their right mind would work so hard and face so much risk for so little?

Posted by: Belle on October 29, 2010 08:49 AM
6. Bruce @ 1 - ... "a pretty dumb personal choice for one of the richest people in the world to choose where to live based on taxes."

98% v.s. 30% (+/-)?

Truly a Liberal Progressive Math Genius there Bruce, and you call KR dumb?

Do you pay 98%? You should you know! You obviously make your money off the backs of the "little people". oops, I mean the taxpayers.

Posted by: James on October 29, 2010 09:17 AM
7. In "Dreams from My Father," Obama's father said that even a 100% tax rate was justified for "The Rich." So you see these leftists can't do logic or reality very well. If we take 100% from the rich then they won't be rich anymore. Even then there wouldn't be enough to satisfy leftist spending.

A flatter tax is a far better solution because it is more fair and more to the point, it draws from a much larger pool.

The leftist plan just causes "the rich" to move and/or shelter their money to avoid leftist governments. Surely no one here is dumb enough to think Keith Richards keeps his money in Conn. where it can be taxed? Nor does Gates Sr. keep his money in taxable form here in WA. If Gates ever wants to donate the majority of his wealth, not just his sheltered income, to the WA general fund then we can start taking him and his sycophants like Bruce seriously.

The left would rather kill the golden gooses for a one time sale of their feathers than take an egg or two a week for the long haul.

Posted by: Jeff B. on October 29, 2010 09:31 AM
8. Bruce @1 claims without a link that taxfoundation.org has Washington at #35 in tax burden, a claim that caused simultaneous coffee-thru-the-nose spurts amongst readers.

OK, I'll pick one stat from them that perhaps Bruce can explain, our #5 rank in Tax Freedom Day. Better than Connecticut's, but nothing to be proud of.

Posted by: yaddacubed on October 29, 2010 09:31 AM
9. I'm glad SP is taking advice from drug addicted rock stars who can't make it on their own, and suck when they try.

Posted by: Ian Faith on October 29, 2010 09:38 AM
10. Using the taxfoundation.org site to figure out where to live is useless.

Tax burdens are based on a large number of variables. A State that has low property taxes and high income tax would be good for someone who is retired and has a lot of savings, no income to tax.

Total tax burden is just that, a total. That is why good tax advisers are worth their salt.

Posted by: Vince on October 29, 2010 10:58 AM
11. @10,

Why not? We elected a druggie like Obama.

"Pot had helped, and booze; maybe a little blow when you could afford it. Not smack, though." Barack Hussein Obama - Dreams From My Father

Posted by: NotSmackThough on October 29, 2010 11:45 AM
12. Bring up the problem of confiscatory tax policies, and the leftists simply insult "the rich", rather than seeing the end game.

Tax what you want to encourage, lower taxes on what you want to discourage.

They see a target when they see deep pockets. What they don't see is what those deep pockets mean to the people affected by them. The wealth means jobs. Investments in new products. The purchase of goods, giving all manner of benefits. And all of these mean taxes paid by the not-so-rich.

It's funny but sad that when you look through blue-colored lenses, you can be green...green with envy, but green about renewable resources. What they DON'T get is that wealth is a renewable resource running an economy. Take the wealth, kill the economy. Tax the wealth appropriately, and the wealthy do...not just can...things that help everyone. Not just a one-time shot, but on an ongoing basis.

As I've often said, there is a direct link between being a lefty and not knowing anything about economics. Or if you're a school district, not teaching economic principles.

Mention an economics-based opinion around a lefty, and what response do you get? "Well, I don't want life and death decisions regarding the unfortunate to be determined by the bottom line." No clue whatsoever.

Posted by: scott158 on October 29, 2010 12:59 PM
13. @10 I'd say KR has done okay for himself and if he wanted to, could wipe his ass with $100 bills. He's very talented and surrounded himself with people who helped him make it to the top. Nothing wrong with that.

If I recall, U2/Bono did something similar to avoid confiscatory taxes in their home country.

Same thing would happen here if I-1098 passed here. The million/billionaires in this area aren't going to pay these taxes. They'll just move assets elsewhere.

Posted by: Palouse on October 29, 2010 01:51 PM
14. Good point Palouse!

Posted by: Laurie on October 29, 2010 03:46 PM
15. Wrong-o, Bruce. I'm from there, and Weston - or anywhere else in CT - is going to be one giant hell of a lot better than anywhere else that still gives you easy access to Manhattan. MUCH cheaper than anywhere in northern NJ, Westchester or Rockland Counties in NY, or Long Island NY. MUCH cheaper, given that easy access to Manhattan is the goal, for both business and recreation.

Posted by: jj on October 29, 2010 06:46 PM
16. Washingtonians have to rescind the current property tax convenants and start re-assessing and taxing property fairly.

For example:

http://www.redfin.com/WA/Kent/26719-115th-Ave-SE-98030/home/403702

$249,000 home in Kent, pays

* Annual Taxes: $3,015

http://www.redfin.com/WA/Bellevue/2822-98th-Ave-NE-98004/home/506537

$2,488,000 home in Bellevue pays

Annual Taxes: $12,380

The $2.4 million dollar home costs 10x as much, but pays only 4x the taxes.

Posted by: John Bailo on October 29, 2010 07:26 PM
17. Bruce, you're missing one key point of what Keith said: "The whole business thing..." Keith probably doesn't take a personal income. Most of his bills are paid for by the band, their label, etc...i.e. they're business expenses. That means that living in Delaware is the perfect place for him.

A tangential test for my theory is to look and see how many times the Stones have played a concert in Delaware. Why? Because Delaware corporations pay no business taxes if they don't actually conduct business in Delaware. No concerts in Delaware means that the Stones as a business only pay federal corporate taxes (which unfortunately are some of the highest in the world).

Posted by: blindman on October 30, 2010 12:20 AM
18. You know, talking of classic rock legends, I'm reminded of that song I'd Love To Change The World by Ten Years After, in particular the line:

Tax the Rich, Feed the Poor,
Til there are no Rich no More

I always thought that was quite insightful, especially how it's put. Tax the rich not until there aren't any poor, but there are no more rich. And it's true - take everything "the rich" have and you won't solve poverty or a State lacking funds, all you'll have done is added more people to the rolls of the poor and needy.

Posted by: Shanghai Dan on October 30, 2010 02:55 AM
19.
#19

Except it's more like:

"The Rich Tax the Poor and Middle Class
Until there is no more food to eat"

Now that all the stock market bubbles have burst, the Rich are using Government to extract money from the working middle classes.

Posted by: John Bailo on October 30, 2010 07:10 AM
20. Bono and the Edge live in Monaco most of the year. It is nice and sunny (although expensive for the average person) but the reason for them is simple, no taxes.

Those guys are not conservatives, but funny how they vote with their feet when it comes to taxes. Bill Gates Sr. should pay attention, a lot of capital will leave this state if there is a income tax. It is a lot sunnier in Austin and Palm Beach than in Seattle.

Posted by: Joe on October 30, 2010 08:44 AM
21.
Actually the Stones, Bono and Gates have something in common.

They had their greatest hits ( Sticky Fingers, Joshua Tree, Windows 95 ) decades ago, and now coast on the their laurels.

So, of course, they want to tax the income of the currently productive proferssional and working classes and hide their properties from the tax man, since they have no hope of every repeating their successes...

Posted by: John Bailo on October 30, 2010 09:14 AM
22. John@17, your post is not only off-topic, it's also factually challenged. First of all, taxes are based on assessed value (which can be challenged through a well-defined process), not the asking price (which is determined by the particular owner and their realtor). The houses in the example you give differ by a factor of 5, not 10, in assessed value. Secondly, taxes are not uniform from one place to the next because local governments have different taxes as voted by their citizens or their elected representatives.

Posted by: Bruce on October 30, 2010 10:59 AM
23. I wonder if Keith Richards is a libertarian?
He's obviously not a social conservative, yet he sounds a bit like a fiscal conservative.
If he is also against the Mideast wars, then we may have another closet libertarian on our hands!

Posted by: Bruce Guthrie on November 1, 2010 10:21 AM
24. Keith Richards has a PHD in economics from MIT, so I think he clearly understands the economic consequences of behavior.

Posted by: Davesix on November 1, 2010 11:03 AM
25. In fact, he has that in common with Greg Mankiw.

Posted by: Davidonkels on November 1, 2010 11:26 AM
26. FWIW, Keith's wife, Patti, told Vogue recently that he's a Democrat and hasn't changed politically over their 27 year marriage, whereas she has changed from Republican to Independent.

Posted by: Mary on November 1, 2010 11:34 AM
27. A small biz owner who has an overhead of 70% already pays 1.8% taxes ON REVENUE NOT ON PROFIT starting at revenue of $1! So, effectively, this poor sod is already paying 6% tax on income while a similarly earning amazoner is not paying anything. Now 1098 threatens to add another 5% tax! How anti-small business is this?

Posted by: bill on November 1, 2010 12:24 PM
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