Bob Dylan's 300 million dollar tax move.

[TC Talks]

As we know, Dylan sold his music earlier this month, more than likely it was to reduce his tax liability...

That old order is rapidly fadin’. The foregone revenue from Dylan’s deal — or Stevie Nicks’s sale of an 80-percent interest in her work, valued at $100 million — may no longer be so trivial. Taxing $300 million at 20 percent raises $51 million less than taxing it at 37 percent.

And more such deals are likely on the way. The copyrights to hit songs are an increasingly valuable asset, partly because they get played so often on streaming services, producing a reliable royalty stream for the intellectual property holder.

Meanwhile, artists cannot make money playing concerts, due to the pandemic — and yes, the septuagenarian Dylan was planning to tour until covid-19 hit — so they need new sources of cash.

Given all that, selling his copyrights might have been a smart move for Dylan regardless of the tax rate. The capital gains break, for him and for others similarly situated, is basically a windfall.

It’s certainly not stimulating new activity, much less economic growth: He already wrote the songs, under the supposedly unfair pre-2006 rules.

President-elect Joe Biden supports equalizing capital gains and ordinary income rates, at least for households earning more than $1 million. If kept, Biden’s promise would restore a measure of equity and efficiency to the tax system.

However, as one Los Angeles entertainment lawyer admitted to the Journal, it caused “a lot of fear in the bowels of Hollywood.”