SDC OmniMedia Group Magazine

A Nashville songwriters group is singing the praises of Congress, which moved closer on Tuesday to giving artists who make a profit when they sell their compositions a tax break of 50 percent or more.

House and Senate negotiators agreed as part of a larger tax cut bill to reduce the top rate on the sale of songwriters’ music catalogs, or collected works, from a top personal income tax rate of 35 percent to the lower capital gains rate of 15%.

That means people such as Liz Hengber, who penned a string of hits for Reba McEntire and sold the catalog of songs in 2000, would no longer have such windfalls treated as personal income, but rather as capital gains taxed at the lower rate.

“Here I am, little ol’ Liz Hengber, all of 5-foot-2, 110 pounds, paying 40 percent in taxes when I sold my catalog,” she said, “while my co-publisher, Warner Chappell, part of Time Warner, or whoever it is, a huge corporation, is paying just 15 (percent) or 16 percent.”

It was cases such as Hengber’s that prompted Nashville Songwriters Association International, or NSAI, to examine an anomaly in the law that prevented tunesmiths from selling “self-created” work under the more favorable capital gains rate.

Bart Herbison, NSAI’s executive director, said his organization has spent the past five years and paid more than 500 visits to Washington in an effort to change the law.

“Now when songwriters sell their life’s work, it will be treated like the sale of any other business,” Herbison said. “For us, this is historic.”

Senate Majority Leader Bill Frist, R-Tenn…, who helped move the provision through a House-Senate conference committee, said Tuesday that this is a fair deal for songwriters.

“Songwriters deserve fair compensation for their work. This change in the tax code will reduce songwriters’ taxes by up to 35 percent. It’s a simple matter of fairness for artists who fuel a multibillion-dollar industry but often see a very small percentage of the revenues they help generate.”

The provision will only apply to catalog sales — bodies of collected works that songwriters typically sell to music publishers for prices ranging from $300,000 to $3 million. Royalty income and advances for songwriters will still be taxed as personal income.

Still, Herbison said he expects critics to take a few potshots at his organization and at the lawmakers who supported the songwriters’ tax break.

“We’re going to take some heat on this. Everybody will think this is something that will make rich songwriters even richer,” he said, adding that the typical songwriter brings in only about $5,000 a year, and that they deserve a chance to enjoy the fruits of their labor if they do get lucky with a string of hits.

Bob Regan, president of the NSAI board of directors and an active songwriter himself, said while he sold a catalog in recent years for a six-figure sum, it had taken him more than 20 years to get well-enough established to even be able to sell a body of work.

“When I sold that catalog, I had to make up for all the years of missed pension and retirement savings,” said Regan, who has written hits for Keith Urban and Billy Ray Cyrus.

Hengber, whose catalog sold for under $500,000, said professional songwriters — people who don’t sing or tour for a living — have to adopt a “squirrel” mentality and spread lump sums over several years.