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Off-Balance Sheet: If The Stones Don't Pay Taxes, Who Does?


...if the ultra-rich aren't filling the coffers of The Man, then who is?


Relax, it's only money.

Here in the 'Ville we like to keep things smart, but we also love to laugh. All work and no know how it goes. With that in mind we proudly introduce The "Off-Balance Sheet," a place where Minyans can experience humorous takes on the world of finance, personal stories from our Professors and Minyans and all the other stuff that makes life worth living. So take a break from the flickering ticks and dive in.

This past Sunday, The New York Times ran an article on the front page of the Business section, titled, "Gimme Tax Shelter," a play on the Rolling Stones classic, "Gimme Shelter."

According to the report, the Rolling Stones have been using the services of Johannes Favie, a Dutch accountant whose Amsterdam-based company set up a series of tax shelters in the Netherlands which reduced the band's tax burden to a paltry 1.5 percent on earnings from royalties--$7.2 million on $450 million in earnings.

Okay, so rock stars don't live by the same rules as the rest of us. I don't have as many private islands or jets or South American ex-wives as Mick Jagger. I can accept that. However, it's safe to say I'd be treated to the full force of the federal government's brimstone and hellfire if I tried to sock away a little extra dough for myself by declaring a 1.5 percent tax bracket for myself "because the Stones do it."

So if the ultra-rich aren't filling the coffers of The Man, then who is?

Do Tax Brackets and Physical Stature Have a Correlation?

As I pondered the issue of unbalanced taxation, I remembered Leona Helmsley's infamous quote, "Only little people pay taxes." Being 6'2" and 225 lbs., I suppose I could be considered "little" in, say, Samoa. Or Tonga. But I see half my income flying out the window to pay for useless things like roads, education, and social programs. On the other hand, Keith Richards clocks in at a measly 5'7" and skates by without bearing his share of the load. To further complicate matters, iconic Hollywood dwarf Billy Barty (3'9") played a tax collector in 1987's "Rumplestiltskin." Confusingly, the Billy Barty Foundation describes itself as "a non-profit, tax-exempt (note: emphasis mine) organization dedicated to improving the quality of life for Little People." Throw in former Secretary of Labor Robert Reich's ideas about abolishing the sales tax (he was born with multiple epiphyseal dysplasia, which caused him to grow to a mere 4'10") and the Helmsley theorem really starts to fall apart.

Now I was really perplexed.

Looking Deeper…Er…Lower…Er…Closer To Ground Level

For answers, I turned to the Little People of America, an organization started in 1957, also by Billy Barty. I discovered that LPA is not only tax-exempt, but that many, if not most, of its members are permitted the same customary deductions by the IRS when filing their returns. Deductions that U.S. citizens of standard height are allowed for things like business travel, union dues, and interest paid on home mortgages all apply to little people, too. Additionally, expenses incurred for health care costs are deductible. Considering the complex and wide-ranging medical issues that dwarves and midgets face, writing off prescriptions and hospital visits could further reduce little peoples' taxable income. Meaning that a little person might very well find himself in a far lower tax bracket than, say, an NFL linebacker.

At a crossroads in my investigation, I found myself grasping at straws for answers. What was Leona Helmsley talking about? What sort of empirical evidence did she have to back up her claim that only little people paid taxes?

As has become habit, almost a tic of sorts, I asked my good friend and colleague Kevin Depew (5'9") to shed some light on the issue.

Justin, I don't think Leona Helmsley meant "little" in the way you understood it. Or rather, misunderstood it.

She said "little people" didn't she?

She meant people with a lesser degree of wealth. However, there are a number of things the middle-class earner can do to reduce his or her tax burden. For example, a lot of contributions to retirement accounts aren't taxable. Neither are charitable donations. And you get a pretty hefty tax credit for every child you have under the age of 17.

But I didn't have any kids before I turned 17. How can I roll back the clock to claim my tax credit?

Justin, you're not getting it.

I know. That's why I'm asking you about it. Because I want to get that credit.

Let's move on.


If you're self-employed, a Keogh plan can provide some nice savings at tax time.

I can't believe you just said that.


Because you know I work with you. You know I'm not self-employed.

I meant-

Do you know something that I don't know?

I'm talking about self-employed people in general, salting money away for retirement in a Keogh plan and deducting the contributions. Like an IRA. Same thing.

Now you're talking about the IRA. I don't live in Northern Ireland, Kevin. Do you really think I fly in from Europe to get to the office every morning?

Again, you're not understanding me.

Um, I would say you're not understanding me. Do I have to join the Rolling Stones just to save money on taxes?

That would be one option. Although I'm not sure they're doing any hiring right now.

So now you're saying I'm a lousy musician.

Justin, I think we're done here.

Yeah, okay. Thanks a lot, Kev. I won't spend all the money you just saved me in one place.

Let's Sum It Up, What Does It All Mean?

To put it as succinctly as possible, I have no idea what it all means. And I certainly am no closer to understanding why it seems to be okay for the wealthy to contribute less to Uncle Sam than everyone else. I guess the long and short of it is, I'm paying my taxes this April.
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