WEBVTT - Bloomberg's Goldman on Broadway Fight for Tax Deduction (Audio)

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<v Speaker 1>here's Bill Maloney. Good afternoon, Charlie. Manuis averages have been

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<v Speaker 1>Nine out of tennesse B sectors are lower, led by

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<v Speaker 1>Transports dropped a hundred and thirty five points and as

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<v Speaker 1>Sacks and Boeing. Verizon led to the upside. H R

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<v Speaker 1>not Block gain thirteen percent that's most since two thousand

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<v Speaker 1>eight after earnings, while Mattress firm fell thirteen percent after

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<v Speaker 1>its results and the latest UK pole conducted for or

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<v Speaker 1>Be Independent showed fifty five percent leave fortcent remain live

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<v Speaker 1>from the first breaking news descom Bill Maloney, Charlie, all right,

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<v Speaker 1>thank you very much, billing to hear a live breaking

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<v Speaker 1>news over your Bloomberg squawk. Ask you you a w

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<v Speaker 1>K on your terminal. I'm Charlie Pelt. That's a Bloomberg

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<v Speaker 1>business flash. Mr Secretary, Mr Burns, did you hear the

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<v Speaker 1>news about good old General Musser Street. They renamed it

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<v Speaker 1>after him. The Mercer legacy is secure. Onlie had to

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<v Speaker 1>do is Die? That's a lot less work. We ought

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<v Speaker 1>to give it a try. How you're going to get

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<v Speaker 1>your debt plan through? Hamilton's a record sixteen Tony nominations.

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<v Speaker 1>That's just the snippet from the room where it happens

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<v Speaker 1>where some of the stars of this very talented cast

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<v Speaker 1>are singing one of the all the songs are so popular,

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<v Speaker 1>but certainly that is one of the big ones. Now,

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<v Speaker 1>the Tony Awards are this weekend, and as we get

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<v Speaker 1>ready for that and wait to see how many actual

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<v Speaker 1>awards Hamilton's wins. On the sixteen, it has been nominated

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<v Speaker 1>for a very interesting story written today by our own

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<v Speaker 1>Henry Goldman, Alexander Hamilton's introduced the idea of federal taxes.

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<v Speaker 1>Broad A producers, enjoying a record season, buoyed by his

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<v Speaker 1>namesake musical, are lobbying Congress to limit what they owe. Henry,

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<v Speaker 1>that's a great way to start your story. And welcome

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<v Speaker 1>to taking stock, Hi, Kathleen, It's a pleasure to be here.

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<v Speaker 1>So uh, you know who doesn't love Hamilton's And you

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<v Speaker 1>know you have any kind of friends or relatives coming

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<v Speaker 1>from out of town, everybody wants to go to Broadway,

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<v Speaker 1>which is one reason why you know New York State

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<v Speaker 1>Senator Chuck Schumer is arguing for this tax break. Tell

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<v Speaker 1>us about it. Well, it took several years of lobbying

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<v Speaker 1>and cajoling before Broadway last year was able to get

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<v Speaker 1>a tax provision passed by the Congress and signed by

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<v Speaker 1>the President that would allow investors in Broadway shows to

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<v Speaker 1>deduct their investment in the first year. And UH this

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<v Speaker 1>was something that TV and movie investors had, but live

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<v Speaker 1>theater investors didn't have. And the idea was that people

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<v Speaker 1>who were investing in Broadway shows they would actually have

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<v Speaker 1>to pay tax on what was the estimated profit that

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<v Speaker 1>a producer might include in his offering circular to the investor.

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<v Speaker 1>But it was basically an optimistic assessment of how much

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<v Speaker 1>money they might make and how soon they might make it.

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<v Speaker 1>And on the basis of that optimistic estimate, UH, an

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<v Speaker 1>investor was taxed even if the show might fail. So

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<v Speaker 1>they were able to get this past, which allowed investors

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<v Speaker 1>to first of all deduct their investment as a as

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<v Speaker 1>an expense and also avoid paying tax on so called

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<v Speaker 1>phantom income based on the optimistic assessment of the producer, who,

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<v Speaker 1>after all, is trying to sell a show in the

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<v Speaker 1>first place. Well, there's no doubt that, you know, as

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<v Speaker 1>your story points out, four or five per wormans is

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<v Speaker 1>closed without even recouping their startup costs. It's such a gamble.

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<v Speaker 1>You gotta for a lot of people, gotta have money

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<v Speaker 1>you're willing to never see again if you're going to

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<v Speaker 1>invest in a Broadway play. So why is the opposition

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<v Speaker 1>in Congress? Well, it is a gamble, but life is

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<v Speaker 1>a gamble. I mean, you know, let's say you are

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<v Speaker 1>in the biotech business and you go out and you

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<v Speaker 1>try to sell stock, either as a private offering or

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<v Speaker 1>as a public offering, and that biotech company or any

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<v Speaker 1>other startup goes belly up. Those investors lose their money.

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<v Speaker 1>And so there are people in Congress who say that

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<v Speaker 1>why should this industry, the show biz industry, get a

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<v Speaker 1>tax advantage that people in other industries don't get. But

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<v Speaker 1>did you just say that television, film, other kinds of Well,

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<v Speaker 1>that's right, I mean, but you know, we're talking about

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<v Speaker 1>glamorous professions. That this is the argument against that that

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<v Speaker 1>the glamour has sort of clouded the eyes of some

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<v Speaker 1>members of Congress, and they voted to do this, and um,

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<v Speaker 1>it's uh, that's you know, part of the argument against it.

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<v Speaker 1>So that's the argument against it. Is the argument for

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<v Speaker 1>in part that you know, we support the arts in

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<v Speaker 1>many ways. It is a constant struggle for painters, for sculptors.

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<v Speaker 1>Uh you know, so is it that different to give

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<v Speaker 1>a Broadway play which is actually theater some support as well. Well,

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<v Speaker 1>you know, it is a tough investment. We do want

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<v Speaker 1>to support the theater. The theater probably nationally provides about

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<v Speaker 1>fifteen billion dollars in economic activity to the country, just

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<v Speaker 1>live theater long. We're not talking about TV and movies here.

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<v Speaker 1>So uh, there there are arguments for it, obviously, And

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<v Speaker 1>one of the arguments is that you know, somebody who

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<v Speaker 1>starts a company like my biotech company, for example, he

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<v Speaker 1>can go to a bank, you can go to a

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<v Speaker 1>venture capitalist and get that kind of money to start up.

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<v Speaker 1>And really a Broadway showman can't do that. He doesn't

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<v Speaker 1>have those sources of capital available to him. You see Hamilton's.

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<v Speaker 1>I did see Hamilton's. I liked Hamilton's, but I'm not

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<v Speaker 1>about to promote Hamilton's. There are a lot of good

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<v Speaker 1>shows out there. There are shows that fail that are

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<v Speaker 1>really good. Well, you're you're a very lucky man, sir.

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<v Speaker 1>A lot of people would love to be in Henry

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<v Speaker 1>Goldman Shoes. I'm gonna tweet out your story. Henry Broadway

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<v Speaker 1>wants logs, longer, tax breakers, Hamilton's Prince Money. This is

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<v Speaker 1>taking Stock on Bloomberg Radio. We're going to continue to

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<v Speaker 1>listen to one of the hit tunes from Hamilton's awarded

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<v Speaker 1>her sixteen Tony nominee awards this year. This is Fig Radio, Bloomberg.

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<v Speaker 1>Taking Stock is going to be taking a look at

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<v Speaker 1>lagoons that you can put in the desert, Crystal lagoons. Yes,

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<v Speaker 1>coming up, Bomb Bloomberg Radio.