The fallout from the COVID-19 pandemic quickly altered the landscape of the music ecosystem. From canceled festivals to delayed tours, music-makers were left without access to their primary traditional income streams. Congress provided creators with some temporary lifelines at the start of the pandemic by passing the CARES Act. But as the pandemic continues, and with many CARES Act provisions expiring, Congress must provide additional financial relief for music creators.
The Help Independent Tracks Succeed (HITS) Act, a bipartisan solution introduced by Representatives Linda Sánchez (D-Calif.) and Ron Estes (R-Kansas), would have a big impact getting independent artists back to work and back in the studio. The HITS Act allows an individual to fully expense the cost of new studio recordings on their taxes, up to $150,000. This small tax incentive would alter the current tax policy that requires individual recording artists and record producers to amortize production expenses for tax purposes over the economic life of a sound recording.
Josh Abbott, an Austin native and member of the Recording Academy, recently penned an opinion piece in the Austin American-Statesman in support of the HITS Act. As the leader of Texas-based country collective The Josh Abbott Band, Abbott is well aware of the tremendous impact the COVID-19 pandemic has had on the financial health of the entire music community.
"The majority of music creators earn around 75% of their income through live shows and events, which are largely on hold due to the pandemic," Abbott writes. "This has been a difficult year for all of us, but it has been especially crippling to the financial well-being of musicians."
Abbott continues by stating how the HITS Act will enable struggling creators the ability to continue their careers during and after the pandemic, stating, "This bill provides financial support for musicians to stay in the studio now and create music for their next album and their next tour."
The cost of recording a new project still remains significant, especially in a year where many creators saw their typical income decrease. "Recording an album involves a whole host of expenses, including studio equipment, rental fees, staff costs, studio musicians and much more — costs that could easily run into the tens of thousands of dollars," Abbott states. "Under current law, music creators can write off these expenses, but it must be done in a gradual manner — usually over a 2-3 year period."
The HITS Act would allow independent creatives the opportunity to fully deduct production expenses in the year they occur, instead of amortizing production expenses over the full life of a sound recording. Currently, film and television productions already enjoy the ability to fully deduct production costs under the tax code. The HITS Act would provide tax parity for independent music creators and ensure that all corners of the creative industry are treated equally in the law.
Abbott shared the profound impact this modest tax change would create for his immediate financial outlook.
"In my case, I'm scheduled to record a new project album at Matchbox Studios in Austin. Studio costs will run $40,000, with another $10,000 on musicians. Being able to write off those expenses in full this year would save me thousands of dollars in taxes — freeing up money that could go toward a local studio and into the pockets of touring musicians who aren't touring. This is one small example of how the HITS Act will benefit musicians and the local economy."
Congress has the ability to positively impact the entire music ecosystem by passing the HITS Act, which would help ensure that music plays on after the lockdowns are lifted.
"With so many artists and songwriters off the road, we could see an incredible amount of inspiring music moving into 2021 because artists will have the resources to create those albums," Abbott concludes. "Encouraging and incentivizing artists to create more music will result in a renewed enthusiasm to tour again when the smoke clears."
After thanking the members of the Texas congressional delegation, who already signaled their support of the legislation, Abbott called on other Texas-based members of the music community to take action, stating, "I urge all Texans to contact their congressional representative and ask them to support the HITS Act, too. Let's hope Congress can give us a little victory."
Read Josh Abbott's full opinion piece in the Austin American-Statesman.
