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Bob Dylan and the Capital Gains Tax
A “capital gain” occurs when you buy something and later sell it for a higher price. A capital gains tax is when politicians decide they get to grab a slice of that additional wealth.
I’ve repeatedly explained that it is economically foolish to have such a tax because it punishes saving, investment, risk taking, and entrepreneurship.
Simply stated, the capital gains tax is “double taxation,” which is what happens when there are additional layers of tax on income that is saved and invested.
I’m motivated to address this issue again because of a recent column in the Washington Post by Charles Lane.
He wants us to believe that singer-songwriter Bob Dylan has been rewarded by the capital gains tax.
Bob Dylan…just sold the rights to “Blowin’ in the Wind” and 600 other songs to Universal Music Publishing Group for a reported $300 million. …This is a tribute to his genius and, on the whole, to a political and economic system that rewards artists… Nevertheless, some socially conscious musician could write a song protesting the Dylan deal,
because of what it reveals about that engine of irrationality and inequality known as the U.S. tax system. A cardinal defect of the system is highly favorable treatment of capital gains relative to ordinary income. The top rate on the former stands at 20 percent; on the latter, it is 37 percent. …the obscure 2006 law known as the Songwriters Capital Gains Tax Equity Act, which permits songwriters — but not painters, video game makers or novelists — to treat the proceeds from selling their copyrights as capital gains, too. …The capital gains break, for him and for others similarly situated, is basically a windfall. …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.
At the risk of understatement, I disagree.
What Mr. Lane doesn’t appreciate or understand is that the Universal Music Publishing Group purchased the rights to Dylan’s music for $300 million because they expect his songs to generate more than $300 million of income in the future.
And that future income will be taxed when (and if) it actually materializes.
In other words, a capital gains tax is – for all intents and purposes – an added layer of tax on the expectation of future income. Double taxation in every possible sense.
This is why I’ve pointed out that Biden’s plan will make the tax code more punitive, not more equitable and efficient as Lane asserted.
Since we’re on the topic of capital gains taxation, I’ll also cite some relatively new research from the San Francisco Federal Reserve.
Here are the key findings in the working paper from Sungki Hong and Terry Moon.
This paper quantifies the aggregate effects of reducing capital gains taxes in the long run. We build a dynamic general equilibrium model with heterogeneous firms facing discrete capital gains tax rates based on firm size. We calibrate our model by targeting relevant micro moments and the difference-in-differences estimate of the capital elasticity based on the institutional setting in Korea.
We find that the reform that reduced the capital gains tax rates from 24 percent to 10 percent for the firms affected by the new regulations increased aggregate investment by 2.6 percent and 1.7 percent in the short run and in the steady state, respectively. Moreover, a counterfactual analysis where we set a uniformly low tax rate of 10 percent shows that aggregate investment rose by 6.8 percent in the long run. …Our findings suggest that reducing capital gains tax rates would substantially increase investment in the short run, and accounting for dynamic and general equilibrium responses is important for understanding the aggregate effects of capital gains taxes.
And here are two of the key charts from the study.
And here’s the part of the study that explains the above charts.
Panel A in Figure 2…shows the parallel trend in investment between the affected and unaffected firms…positive and statistically significant coefficients after the year 2014 indicate that lower tax rates induced the affected firms to increase investment. Panel B in Figure 2…shows the parallel trend in investment between the affected and unaffected firms…positive and statistically significant coefficients after the year 2014 indicate that lower tax rates induced the affected firms to increase the size of tangible assets.
The bottom line is that is that you get higher wages with more productivity…and you get more productivity with more investment…and you get more investment if you don’t impose harsh tax policies on people who invest.
Which is why the correct capital gains tax rate is zero, whether you’re looking at theory or evidence.
Which is the core message in my video on capital gains taxation.
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P.S. There’s also a video explaining why it’s especially wrong to impose the capital gains tax on “gains” that are solely the result of inflation.
P.P.S. And somebody needs to do a video on why it’s an awful idea for the government to tax capital gains that only exist in theory.
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bob dylan plays harmonica on the song I PLEDGE MY HEAD TO HEAVEN on this Keith Green album below
I pledge my head to heaven
And extremely god fearing text! i’d rather be found dead to love my wife more than he who saved my soul…
Check out the text here:
Well, I pledge my head to heaven for the Gospel,
And I ask no man on Earth to fill my needs.
Like the sparrow up above, I am enveloped in His love,
And I trust Him like those little ones, He feeds.
Well I pledge my wife to heaven, for the Gospel,
Though our love each passing day just seems to grow.
As I told her when we wed, I’d surely rather be found dead,
Than to love her more than the one who saved my soul.
I’m your child, and I want to be in your family forever.
I’m your child, and I’m going to follow you,
No matter whatever the cost, I’m gonna count all things lost.
Well I pledge my son to heaven for the gospel.
Though he’s kicked and beaten, ridiculed and scorn.
I will teach him to rejoice, and lift a thankful praising voice,
And to be like Him who bore the nails and crown of thorns.
I’m your child, and I want to be in your family forever.
I’m your child, and I’m going to follow you,
No matter whatever the cost, I’m gonna count all things lost.
Oh no matter whatever the cost, I’m gonna count all things lost.
Well I’ve had the chance to gain the world, and to live just like a king,
But without your love, it doesn’t mean a thing.
Oh no matter whatever the cost, I’m gonna count all things lost,
Oh no matter whatever the cost, I’m gonna count all things lost.
Well I pledge my son, I pledge my wife, I pledge my head to heaven,
I pledge my son, I pledge my wife, I pledge my head to heaven, for the gospel.
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Man who led Bob Dylan to Christ says legendary singer is still walking with Jesus
October 2, 2012
69485904
22K
By Dan Wooding
Bob Dylan
Brooklyn-born Messianic Jew Al Kasha, 75, the double Oscar winning songwriter who in 1978 prayed with Bob Dylan at a Bible study in his Beverly Hills home to receive Christ, believes that Dylan never lost his faith despite many rumors to the contrary.
Bob Dylan made a well-publicized conversion to Christianity, went through a discipleship course at a Southern California Calvary Chapel, and produced three strongly Christian albums, “Slow Train Coming” – written in Kasha’s home — “Saved” and “Shot of Love”.
However, when a fourth “Christian” album failed to materialize in 1983, a rumor was circulated that Dylan had “renounced” his faith.
His new album, “Tempest,” is replete with Christian lyrics, as Kasha notes: “I am absolutely thrilled that Bob has shown through this new record that he has never lost God’s calling in life,” he said. “He’s never given up.
“I get upset when people think that he has because you don’t write all these songs just out there. It takes time to write them and they’re all about Christ so I’ve said this in the past — the media has hurt rather than helped him.”
Kasha went on to say, “I have known Dylan since 1960 when I was at Columbia as their youngest-ever record producer and they were going to drop him from the label as his first CD only sold 7,000 copies.
“I was 22 years old and they had all of these great artists like Rosemary Clooney, Guy Mitchell as well as Johnny Mathis and Tony Bennett, and when I heard this in a meeting, I stood up and, with my legs shaking, and told all of these veteran record producers, “We can’t drop him. He’s a great song writer and they finally agreed and now the rest is history.”
Despite all of his success, having won two Oscars for the theme songs from The Poseidon Adventure (The Morning After) and The Towering Inferno (We May Never Love Like This Again), (both with Joel Hirschhorn), he had a secret that was destroying his life – he was suffering from agoraphobia.
He told me that it was destroying his life, but then one night, in the bedroom which he woulnd’t leave, he tuned into a late Christian TV show and realized that Jesus was indeed his Messiah. He prayed in his room and gave his life over to Christ and was healed of his agoraphobia.
Not long after, Kasha met up with Jess Moody, pastor of the First Baptist Church of Van Nuys, an independent congregation with some 10,000 members, who Kasha said “was very sensitive to people in Hollywood.” It was Moody who then suggested that Kasha begin studying at theological seminary, and he became an ordained Southern Baptist pastor, and started his weekly Bible study in his home where he would teach with his two Oscars on the piano, as I well know as I often would attend, as would people like Bob Dylan, Donna Summer and Mel Carter.
“We had them all coming along to my home Bible study, and that would include struggling actors and actresses, singers and dancers, but also these big stars as well,” he told me. “At that time, there was no place for them to go so we would try to solve some problems that they were facing that were biblically based.”
He then spoke about Bob Dylan who he said had been told about the study by some friends who had shared about this Jewish man who was teaching about Jesus.
“He came to the house every week for six months. In fact he wrote the album, ‘Slow Train Coming’ in in our house. Bob was, at that time, going through a spiritual search and if you look at his track record as a writer, he was always seeking after Jesus and he finally realized that Jesus was his Savior.”
Kasha said that the night that Dylan prayed the “Sinners Prayer” with him, he was with his friend called Clark Mathias and his wife, Ceil.
I asked Ceil if she could remember what happened and she replied, “I sure do, like it was yesterday. There was an amazing warm feeling in our home and in our hearts, and he [Dylan] just opened up and said [after Al Kasha had asked him if he wanted to receive Jesus into his life], ‘Yes I do, yes I do, yes I do,’ and that was that.”
Al Kasha then added, “And he wrote his whole entire ‘Slow Train Coming’ Album in front of our fireplace.”
Did Bob Dylan ever share those songs with you when he was writing them?
“Yes he did,” said Kasha. “We gave him a key to the house because we were song writers and song writers feel a sense of spirit in a room. You know, Dan, you’re a writer yourself and I am sure you would say, ‘I want to sit where I feel something good.’ So he [Dylan] had a key to our house and we trusted him. I heard the guitar playing some nights but I wouldn’t bother him. It was an incredible experience.”
Kasha added, “He [Dylan] said that he felt out home was ‘spiritually anointed’. So many other people also got saved at our home and I see many of them here tonight for this affair. I could hug every one of them.”
I asked Al Kasha what his all-time favorite of the ones Bob Dylan wrote in his home.
“He has a song called ‘Jesus is Lord’ and I love that one,” he said. “However, there are many that I love and I don’t really want to pick out one because I want everyone to buy the album, but I love a lot of them.”
Kasha said that Bob Dylan was baptized after his conversion in Santa Monica, near Malibu, by people from the Calvary Chapel affiliated church.
“So is Bob Dylan a believer?” I again asked him.
“The answer is yes,” he said firmly, “and I think the world doesn’t like to see someone like him being a believer because he’ll bring other people to the Lord, which he’s done.”
Al Kasha concluded by saying, “Looking back, it is an amazing thing that happened in our home. It’s been all these years and our Bible study eventually wound up seeing people like Donna Summer and Bob Dylan accepting Christ.”
If you would like to know God personally, here are four steps…
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