Something to Celebrate

It's okay if the name "Andrew Yang" doesn't ring a bell. His biggest accomplishment so far was creating a program called Venture for America that trains entrepreneurs to work at startups in developing cities across the country. Now he's running for President, and polling at a rockin' 2% among Democrats. But he's scored enough contributions from online donors to make it to the stage at the next Democratic presidential debate, which means there's a chance he could still break through to the front rank of contenders. How is Yang different from the other 59 Democrats running for President? His unique selling proposition is his support for a universal basic income — which he calls a "freedom dividend." His plan gives every American over age 18 a $1,000 check every month. Paying for it would be easy-peasy: he'd implement a 10% value-added tax, eliminate the Social Security wage base, throw in a financial transactions tax (look out, day traders), and tax long-term capital gains at ordinary income rates. He'd also eliminate the current maze of welfare programs like food stamps and housing subsidies. The universal basic income is an exciting intellectual concept. Politicians as diverse as Bernie Sanders and Richard Nixon have supported it. Having said that, do we need to tell you what chance it stands of passing Congress? Reader, we do not. But Yang has another proposal that stands a slightly better chance of becoming actual law: his promise to make Tax Day, April 15, a day of joy and celebration. Can you even imagine all the fun? He argues that Revenue Day should be a federal holiday. Not only that, but there should be celebrations. Everyone should be allowed to direct 1% of their taxes to a special project, department, or activity. On Revenue Day, we would highlight those projects to see what we accomplished, and roll out next year's projects to start getting excited for them. Of course, if we're going to make Revenue Day a holiday, we should do it right. There should be cake. (As Julia Child once said, "a party without cake is just a meeting.") There should be caroling. ("Oh little tax of dividends, how high we see thee fly!") Best Buy should throw open the doors at 5AM so you can line up and blow your refund on a new TV. If Yang really wants to give taxpayers a reason to celebrate, he should make Tax Freedom Day a holiday. That's the day of the year when we stop working just to pay taxes and start working for ourselves. For 2019, it fell on April 16, meaning the average citizen worked the first 105 days of the year just to pay federal, state, and local taxes. Kicking taxpayers in the head with that little info-nugget would be a gangster move. Other countries have created traditions to make paying tax fun. In Finland, the government makes tax returns public at 8:00AM on November 1 — a day the New York Times dubbed "National Jealousy Day" — and newspapers send half their staff out to cover who made what. In North Korea, tax collectors snatch your last potato and smack you with a ceremonial quan-ti truncheon. (One of those is actually true.) Call us crazy, but we think the best way to celebrate April 15 is to pay less tax. The best part is, you don't have to wait until the next election to do it. Call us for a plan, and make that day a celebration!

By the Time We Got to Woodstock . . .

Fifty years ago, a dairy farmer named Max Yasgur thought it would be a rockin' idea to rent his field to a bunch of kids who wanted to throw a concert. From August 15-17, 400,000 hippies, peaceniks, and plain old music fans converged on the scene. If you're a 60s fan, Woodstock represents the high point of that era, a giddy celebration of peace, love, and good vibrations. If you're a hung-up Mr. Normal, you might dismiss it as three days of mud-soaked filth, drugs, and public nudity. And while Woodstock Nation may not have managed to save the world, they managed to leave quite a legacy!

Woodstock Ventures hoped 200,000 fans would pay $6-18 for passes — about $41-124 in today's dollars. (By contrast, tickets to this year's Lollapalooza started at $340 and ran to $4,200.) In the end, organizers grossed $1.8 million, suggesting state and local tax collectors shared a groovy $108,000 in sales taxes (3% for the state and 3% for New York City, where most of the tickets were sold).

Sadly for the squares at the IRS, there was nothing left over for them to tax. It wound up costing $3.1 million to rent the farm, book the performers, and charter the helicopters to lift the musicians over the stalled traffic. At the height of the crush, some acts were demanding twice their usual fee to perform — in cash. The Woodstock documentary, edited in part by then-unknown Martin Scorsese, helped start recouping those losses. But it took until Ronald Reagan (!) was president to finally break even — an irony that shouldn't be lost on counterculture fans.

As the unticketed hordes grew closer, organizers realized there would be no way turn them back, so they declared it a free festival. The crowds turned Yasgur's farm into the third-largest city in New York, and even created their own sharing-based economy. We're talking, of course, about the pop-up pharmacies dispensing various psychoactive adventures, including the brown acid that emcee Chip Monck famously warned was "not specifically too good." Sadly for New York authorities, we suspect none of those unregulated commodity traders bothered filing Forms DTF-17 or ST-101.

Fun fact: members of the Hog Farm commune, led by Hugh Romney (aka "Wavy Gravy") were running a free kitchen on the premises. On Saturday morning, they served "breakfast in bed for 400,000 people" and introduced the hippies to a brand-new food called "granola" [gru-noh luh]. This has nothing to do with taxes, but it'll impress your friends when the topic of Woodstock comes up over the next few days.

Today, Yasgur's farm is still finessing taxes like Jimi Hendrix shredded the national anthem. That's because it's owned by the nonprofit Bethel Woods Center for the Arts, home to a 15,000-seat amphitheater and museum. Local sales tax collectors still take a piece of ticketing and merchandise. But income tax collectors are no-shows (just like concert no-shows Joni Mitchell, the Doors, and others). And while property taxes in Sullivan County generally range from $25-65 per thousand of assessed value, the center's nonprofit status takes 800 acres off the property tax rolls.

Today's music festivals, like Coachella and Burning Man, all try to recapture a bit of that Woodstock magic. Sadly for the fans, the acts are a bit more corporate, the facilities are a bit cleaner, and even the drugs are a bit tamer. (Legal marijuana . . . where's the rebellion in that?) So for this week we'll leave you with a pipeful of gentle hippie sentiments, and hope you enjoy the rest of your summer. Next month after Labor Day, official tax planning season starts, so get ready to save!

Now We Know Why They Call It A "Joy" Stick!

Parenting is full of special moments that create lifelong memories. Your heart bursts in joy as you watch them take their first steps, ride their first bike, and bring home their first report card. When they get a little older, there's the pride you feel when they bring home their first "real" paycheck, tear into the envelope, and listen to them wail in distress, "hey, what the &#@* is FICA?!?"

Glenn Giersdorf, who lives an hour outside Philadelphia, didn't experience that moment quite the same way as most parents. That's because his son Kyle spends six to ten hours per day sitting in his room playing Fortnite, an online video game where players meet on a virtual island and battle it out to be the last one standing. (Some fans describe it as "Minecraft with guns.") But Kyle is no average teenage slacker, and he had his sights set higher than just flipping burgers or scooping ice cream like his classmates.

If you don't have gamers of your own at home, you may not realize how big "e-sports" have become. Yes, professional video games are finally here. With spectators, even. In 2018, 380 million viewers watched 6.6 billion hours of competition on platforms like Twitch and Youtube. There were nearly 3,500 tournaments offering more than $1.5 billion in prizes. E-sports generated another $906 million in revenue from sponsorships, advertising, media rights, game publishing, merchandising, and tickets.

(Look, before we go any further, we know it's a stretch to call sitting in a recliner with a joystick a "sport." But you can play golf from an electric cart with a cigarette in one hand and a highball in the other, and millions of players call that a "sport," so who's to judge? Not Uncle Sam — in 2013, the U.S. issued a P-1A visa, reserved for internationally recognized athletes, to a Canadian League of Legends champ. Even the Olympics are looking to get into the action!)

So . . . earlier this summer, forty million players entered online qualifiers to compete in the inaugural Fortnite World Cup. Last month, 100 survivors met for the live finals in front of 23,000 fans at New York's Arthur Ashe Stadium. When the shooting was over, Kyle — who competes under the screen name "Bugha" — had taken down the largest single score in e-sports history . . . $3 million. That's a million bucks more than Tiger Woods made for winning the Masters!

Now comes the real battle — fighting off the hordes coming after Kyle's prize! The first $600,000 goes to his management team, Sentinel Sports. He can expect to pay roughly $850,000 in federal income tax, $116,000 to self-employment tax, and $212,000 to New York. Fun fact: he'll be the only kid in his class cursing the 2017 tax reform, which costs him over $200,000 in state tax he can't deduct anymore. In the end, he'll wind up with just $1.2 million. He says he wants to use his winnings to buy a new desk for his room.

E-sports are growing fast, which means Kyle Giersdorf won't be the only underage winner grappling with taxes. Take "H1ghSky1" from Seattle, for example, the youngest player on the FaZe Clan team. He's won over $200,000 since March, and he's not old enough to watch PG-13 movies on his own!

Kyle's story has us looking forward to the day when tax planning finally becomes the spectator sport it deserves to be. Can you imagine thousands of cheering fans scalping tickets to watch us take on tangible property regulations, rental real estate loss allowance phaseouts, and the step-transaction doctrine? So call us before your kid hits the big time . . . we've got the trick shots you need to help him keep what he wins!