Any business that wants to stay in business has to be smart with its money — whether it’s a Fortune 500 company, a mom-and-pop shop, or arguably the biggest rock band on the planet. U2 and its philanthropic frontman, Bono, recognized that fact back in 2006, when for tax reasons the quartet moved a portion of its business out of its homeland of Ireland and to the Netherlands.
In the years since, U2 has taken some flak for that move. Last week’s launch of the band’s latest U.S. tour — which is in Phoenix tonight — provided its members with another opportunity to defend their sound tax decisions. As reported by Anita Singh of The Telegraph, Bono said wealthy people who do not take advantage of tax breaks are being “stupid in business.”
What makes the band’s decision even more sensible is that, as guitarist The Edge told Ms. Singh, the vast amount of its business is done outside of Ireland. Added Bono: “The smart people that we have working for us are trying to just be sensible about the way we’re taxed. … And we pay a fortune in tax, just so people know.”
Bono has brought worldwide recognition — and boatloads of his own cash — to important causes such as HIV/AIDS research and developing potable drinking water in Africa. But charitable efforts such as these often run counter to many people’s belief that limiting one’s tax burden is wrong, when in fact so many charitable efforts are possible because of reduced tax bills. “Because you’re good at philanthropy, I think, and because I’m an activist, people think you should be stupid in business. I don’t run with that,” Bono told Ms. Singh.
Beyond philanthropy, when U2 hits the road, the band becomes a massive jobs creator, with huge stage crews criss-crossing continents in a fleet of semis, and hundreds of locals employed at each sold-out tour stop. Again, without the band making sound financial decisions, that kind of economic impact can’t happen. (Note to U2: A sparkling new arena opens next year in Las Vegas and surely would welcome such commerce.)
The hand-wringing over U2’s tax decisions is driven by the idea that competition among states and countries to create favorable tax climates is bad. But instead of people asking why U2 isn’t keeping all its business in Ireland, they should ask why Ireland isn’t relaxing its corporate tax rate. And that same question is applicable in the United States, where agitators and activists frequently criticize businesses for choosing to headquarter in states or countries with better tax climates.
Many in government wear the ability to separate you from your money as a badge of pride — and hardly in the name of love. All they want is you — or rather, your taxable earnings. And if businesses and individuals allow it, governments will tax them until the end of the world — states will never find all the taxes they’re looking for. But if you create better tax policy for businesses and individuals, they will follow, and so will economic prosperity — making for a beautiful day.