[Chapter 25: Tax Avoidance and Next Steps]
Orlando's single, Old Town Road, was released on March 20th. On the 28th, he left New York to start a nationwide promotional tour. When he finally returned to New York, it was already May 1st.
He crashed hard at Daisy's place, sleeping through the entire day and night. It wasn't until the 2nd that he woke up refreshed and headed out to meet the tax expert Daisy had long ago recommended.
"Hello, Mr. Keller. I'm Kurt Smith, a senior partner at KPMG New York," the man introduced himself.
"Nice to meet you, Mr. Smith. I'm Orlando Keller," Orlando replied.
Their meeting was set in an old industrial-style office building on 13th Street in Manhattan's Chelsea district. Over eighty years ago, this had been a factory -- but as manufacturing left Manhattan, old factory spaces got repurposed before demolition. Some were renovated and rented out as office spaces.
on the 36th floor, 13th Street in Chelsea was the rented headquarters for Orlando's record company, arranged by Seymour Stein.
This was actually Orlando's first time visiting his company in person. But he didn't have time to tour around. Instead, he immediately jumped into a discussion with Kurt from KPMG.
"We can set up a subsidiary for your record company in low-tax jurisdictions like the Cayman Islands, Ireland, or the Netherlands. First, transfer your music copyrights to that subsidiary at a low price. Then, the subsidiary licenses them back to the U.S. entity, keeping the profits in the low-tax zone.
Next, establish another subsidiary in tax havens like the Bahamas or the British Virgin Islands to handle transactions with Warner. This setup allows you to avoid the top individual tax rate of 39.6%. Warner pays 'advance royalties' to your offshore entity, which you can categorize as 'loans' instead of income, deferring your tax liability. The subsidiary can even operate at a loss initially."
An expert's words were instantly convincing.
Orlando felt like a light bulb had gone off in his head. Suddenly, the $2,000-per-hour consultation fee didn't seem steep at all.
"The best part is, the offshore subsidiaries' income can be funneled back into your parent company in the U.S. as loans. Since these aren't profits, there's no tax due!"
Orlando was stunned after hearing the full plan.
"Isn't this a bit much? Not paying a single cent in taxes? Won't the IRS notice? They go after even the Mafia's taxes!"
"No worries, it's completely legal. The IRS won't have a leg to stand on. I've been doing this for years." Kurt said confidently. "Mr. Keller, KPMG's reputation speaks for itself. Meeting your requirements is no problem."
"Won't the media bash me if they find out about this?"
"The media's more concerned with jobs these days. U.S. manufacturing is hemorrhaging jobs; General Motors alone has closed 21 plants, and unemployment is nearing 7%. Right now, anyone who brings jobs back is the good capitalist."
"So you're saying I could buy up a factory on the verge of shutting down. Then, if the media finds out, I become the compassionate capitalist boosting public goodwill?"
"No need for that. Those factories come with a lot of baggage, and saving them often means pressure to meet workers' demands." Kurt shook his head. "You can just buy bankrupt land with closed factories, then rehire workers. Same building, same people, but now you're their breadwinner..."
"Ha! I like you, Mr. Smith. I'm hiring you as legal and accounting counsel for my record company, paying standard market rates plus bonuses. But keep everything tight, especially the tax stuff."
"Ha! Your company isn't public, so no financial statements need to be disclosed. Once the money moves offshore, nobody will know what's what..."
The two of them, young and old, were partners in crime, and the room filled with a good vibe.
---
After Kurt left, Seymour and Frank DiLeo came over to see Orlando.
"That guy is a senior partner at KPMG. I've heard of him," Seymour said.
"But I picked PwC," Seymour added.
"Same here," Frank said.
"Enough about that," Orlando smiled. "Let's talk about my upcoming work."
As he finished speaking, Frank grinned confidently and waggled his fingers next to an older man, making the classic "money" gesture with thumb and forefinger.
"Fuck!" Seymour cursed, pulling out his wallet and handing Frank twenty dollars.
"We bet on whether you plan to take a break or keep working," Seymour said.
Frank happily pocketed the cash. "Clearly, I won!"
Seymour shook his head. "I never expected that after a month of non-stop grueling promotion, and only one day of rest, he's ready to work again. After all, he's already pretty successful now."
Orlando, understanding the situation, smiled and shook his head. "How can you say I'm successful? My single hasn't even sold five million copies yet."
Really, it was mostly because he had great stamina -- especially an incredible capacity to recover. Just one day of sleep wiped away a month's worth of exhaustion. Mentally, he felt a bit drained, but since he was focused on making money, he naturally wanted to keep working.
"Boy, if you keep this up for ten years, you'll be unstoppable!"
"Why?"
"Because I see MJ's talent in you, and Madonna's relentless workaholic drive."
Seymour Stein summarized.
Michael Jackson's success was almost guaranteed -- he came from a musical family with singers, producers, and vocalists. Even if MJ had been tone-deaf, his family would have pulled him into the music scene to get by.
Madonna was different.
Her success as the Queen of Pop came partly from luck, but her relentless, never-quit, iron-willed hustle was the real reason she stayed relevant for more than three decades.
"Wow, sounds like I'm something special," Orlando laughed. "But let's get back to talking about my work."
"OK," Frank jumped in. "You've got two things to do. One, record your new song written for Ms. Cuomo, preparing for a new single. Second, shoot the music video for Old Town Road. A lot of TV stations have been asking about broadcasting it -- especially MTV. They call almost every day."
"That's it?"
"For now, yes. Of course, if you have enough songs ready, we can start preparing your first album."
*****
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