Since this upcoming Monday is Tax Day, let's continue on that theme for this week.
My taxes are complicated, like solving a 10 sided Rubix Cube while blindfolded complicated.
Let me explain, or at least try to.
Scott Lang Leadership is an LLC (Limited Liability Company) that files quarterly as an S-Corp with returns due on March 15th.
Scott Lang, the S-Corp, pays Scott Lang, the employee, a W2 wage - it is my salary (and I deserve a raise).
These earnings pass on to my personal taxes via a K-1 flow-through using a W2 and are combined with Be Part of the Music and Music FUNdations using Schedule C for my personal returns. This part of my returns are due on April 15th.
Last week, while preparing my taxes, my accountant and financial planner struggled to agree on how to interpret my 401K. It turns out that our tax code is more like a musical score than a textbook. Every conductor and financial person interprets it differently.
One such area that is open to interpretation is retirement accounts. As a solopreneur, I have an independent 401K, which allows me to contribute both as an employee and an employer. The difference? Taxes.
For those unaware, there are two types of taxes when dealing with retirement accounts: short-term and long-term, and the difference is significant.
Musically speaking, short-term capital gains taxes resemble a Rick Astley tune. Its life span and time on the charts are less than one year, so the taxman, hoping to deter Rick from repeating it, takes a more significant chunk of the profits. Now you understand the muse for Never Gonna Give You Up.
Long-term capital gains taxes are more like a Copland Symphony—classics that have withstood the test of time (longer than a year). So the taxman, wanting more of this type of thinking, takes a smaller chunk of the earnings, making Aaron want to Hoe Down.
The difference lies in the duration of ownership—short-term gains (under one year) are subject to higher tax rates than long-term gains.
Last week, I proffered that tax codes are as much about behavior modification as revenue generation. I stand by that. By taxing long-term capital gains at a much lower rate, the government is incentivizing you to save your money, and rely less on them. Win-win.
The lesson learned? Short-term matters, but long-term matters more for you and our country.
In education, we favor the short-term over the long-term by focusing on:
daily/weekly attendance
Individual class grades
GPAs
Single-game wins and losses
SAT/ACT scores
College acceptance rates
Graduation rates
In music, we aren't much better as we focus on:
Our next rehearsal
Our next concert
Our next contest
Individual chair placement
Next year's incoming class/enrollment
Number of all-region/all-state kids
Yes, all of these matter, but they are short-term (under a year) and do not favor a long-term look at the value proposition of (music) education.
As an advocate who understands the value of participation in music, I know the numbers, but they are mostly short-term. What if we studied and understood the long-term impacts of participating in school music programs. For instance, what if we knew the effect of music in the following areas:
Lifetime marriage & divorce rates
Career types and duration
Lifetime income differential
Number of college degrees
Volunteer hours
Voting rates
Days spent incarcerated
Days spent unemployed
And so much more
I would also be interested to know more about the quality of that life, such as:
Mental health
Happiness
Unhealthy behaviors
Drug and alcohol dependency
Vacation/travel
Number of languages spoken
We want all young people to lead happy, prosperous, and productive lives. However, to fully understand music's impact on a child's life, our tax code shows us the right way to think about it. Short-term matters, but long-term matters more.
We need to study the entire life of someone who has participated in a school music program and value the long-term gains more than the short-term ones.
Why not?