On June 24, Fat Joe was sentenced to prison for tax evasion. The Bronx rapper faces four months and a $15,000 for failure to file income tax returns on approximately $3.3 million in earnings. Initially, he was charged on failure to file tax returns from 2007 to 2010, but the charges were reduced after he agreed to a plea bargain.

Fat Joe isn’t the only rapper to be experiencing the consequences of unpaid taxes. In our story featured in the December/January 2012 issue, writer Seth Colter Walls spoke to a dozen different rappers and their camps during a course of a few weeks. The story talks about fiscal problems and how they have affected rappers. Hard times, indeed.

 

 

Written by Seth Colter Walls, additional reporting by Mark Lelinwalla

Tax default, bankruptcy, debt—real-life situations that the hip-hop community doesn’t like to talk about. But for many rappers, fiscal problems are a major issue.

The voice on the other end of the phone said, “You gonna be all right, man, you hear me?”

Pfft.

Young Buck was experiencing money problems—tax problems, to be precise—and more than 99 of ’em. So for advice and spiritual communion, he had called his boss, 50 Cent, who, in turn, tried to pep him up on the phone (while also recording the conversation, which he later posted online). “A nigga just get confused,” Buck said, clearly in distress. 50 told him, “You gonna be all right, man, you hear me,” to keep Buck optimistic.

Of course, Buck was not really going to be all right. He filed Chapter 11 bankruptcy papers in January, in hopes of reorganizing his finances, as a way to hold off his debts. But in October, the trustee who’d been assigned to his case said reorganization was not viable (in large part because 50 refused to modify Buck’s G-Unit Records contract), and Buck was facing Chapter 7: the liquidation of his assets.

However cold you might think it was for 50 to record and release the conversation, his play was valuable in at least one sense: Lots of rappers are struggling, or have struggled, with keeping their finances in order. MC Hammer, most famously, filed for bankruptcy with a debt of at least $10 million in 1996. More recently, former Crime Mob member Diamond had her car repossessed—during the middle of a video shoot in Atlanta.

But no one’s been talking about it. And no one seems to want to. XXL reached out to a dozen different camps during the last weeks. Not a single artist or executive whose IRS troubles were already a matter of public record was willing to speak to the magazine about their experiences. (That list included Big Boi, Chamillionaire and Ja Rule, among others.)

Keeping one’s money right, and staying on the right side of the law while doing so, is of course an issue that all manner of entertainers have had to deal with. But without getting it twisted or making too broad a statistical claim, we can say that rappers face unusual difficulties that athletes, for example, simply do not.

No, the tax laws aren’t any diff erent for rappers. It’s all the same codes, deductions, forms and filing dates. But it is the case that institutional advantages aff orded to other entertainers are nowhere to be found in the world of hip-hop. For starters, some professional sports leagues require rookies and new recruits to attend financial management classes—as if to warn them on the come-up about the hidden pitfalls of sudden money, before the IRS gets curious. Hip-hop requires no such education, nor does it have anything resembling a formal infrastructure in that way.

One barrier to greater financial literacy in the community, in fact, stems from how so few rappers are willing to talk about money problems. Killer Mike, however, is different (as he is in so many other ways). And when asked for comment on the topic in general, he proved to be a geyser of tips and recommendations—as well as critiques for the broader community. “You could sell cereal, milk, cheese, and you rent a store for $500, $600 a month,” he says. “You could open a small bodega. You could do what I just done: You can open up a barbershop.

“I should have opened my barbershop 10 years ago. I actually started seeing return on my money. I would encourage people, for financial literacy, to seek out small businesses. Big Boi started selling pitbulls, and that turned into a thousand dollars per pup. Some years, 100 puppies he sold; some years, 200 he sold… Do something that can put a few hundred dollars back in your pocket weekly.”

That’s just common sense, you might say, if you’re not particularly inclined to cry any tears for the fi nancial woes of various MCs. But there are unique challenges that lay beyond our collective sense of empathy for individuals we think of (and perhaps envy) as stars. And rap finances are complicated. Especially for young artists, who might be making their first legitimate money through their music, record deals are often structured in a way that specifi cally prevents the recouping of any money beyond an advance. If an artist as venerable and familiar with the game as Snoop Dogg can get tripped up, it can happen to just about anybody. (Snoop was found to owe the IRS more than a quarter-million dollars in 2009, and then another half-million-plus the following February.)

In a genre where being battle scarred and tested can be a sign of status, tax problems seem to be a weakness that hip-hop is ill-equipped to acknowledge, let alone address—thus, 50’s recording of Buck’s tearful phone call, and the half-million-plus views it has netted on YouTube, mockery and all. But none of that helps bring about anything resembling a solution. Social organizations like the Five Million Kids Initiative, run in part by Quincy Jones and Chaka Zulu, have their eyes on teaching financial literacy, among other things, to fi ve million children and adults, but a rap-specific boot-camp course in money does not exist. For now, all we have are the leaked conversations on YouTube.

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There's a fantastic verse on Killer Mike’s “That’s Life II,” from this year’s Pl3dge album, that speaks to the chimerical nature of hip-hop wealth. Mike’s track spits fire in almost all directions, from Warren Buffett to more mainstream political voices, but it also off ers this warning: “But don’t forget your color, brother, we still muthafuckin’ slaves/And that even go for Puffy, who so muthafuckin’ paid/That he’s richer than these White folks, or at least that’s what he say.”

Put another way: The stacks on stacks on stacks don’t always rise as high as they seem in the videos. Clearly, Mike’s not afraid to speak on it. “It’s not in record companies’ interest to make you financially independent,” he says, laughing at the gallows humor. “They don’t have a vested interest in doing it. The NBA and NFL do have a vested interest in it, because they need your Black ass to stay out of jail, so you could run the ball. But traditionally, in music, it’s made more sense for record companies to keep artists in debt, therefore keeping them putting out art when needing a record, publishing deal, things of that nature. The most financially literate [thing] I can advise any young artist to do is look at your immediate surroundings, while you’re still poor, and figure out what business doesn’t cost much for start-up that you use on a daily basis.”

Financial literacy doesn’t just mean avoiding tax problems, either. And on this score, Mike doesn’t offer his advice from the vantage of a high horse. He says he learned a few hard lessons about keeping track of his money as recently as last year, when he ate it during the recording process. “I’m independent, so if I have to buy $2,500 of studio time, I have to do it out of pocket. I’m going to do it, but what I should have done is taken all of the equipment that I sold off after closing the old studio and should have bought a $10,000 house. Then I should have gutted the house and made a recording studio. It was unwise to be spending the money on recording. I stopped doing the stuff that I was doing. You’re not going to be in business and not have failures. The thing is what you learn from your failures and how you incorporate them in your plans for the future.”

But Mike also puts it back on the culture at large. “I think hip-hop gives the people what they want, and not what’s the best for them.” Even if artists speak about money matters, Mike says it’s not what the audience wants to hear. “This is only a criticism,” he adds. “Do people want to hear Jay-Z talk about how to really be rich or Maybachs and Watch the Throne? Jay’s rapped about it, but they don’t go back and listen to ‘Minority Report’ and say that’s what they want to hear. They don’t hear Too $hort and Jay-Z early in their career talk about the importance of financial independence. They hear about Maybachs, cars. That’s what they want to hear. As an artist, they give them what they want to hear. But I don’t put it on just hip-hop artists. I put it on Black people. Why do Black women get their feet done at Asian shops, and not Black ones? That ain’t racist, that’s just saying, Why not put your money back in your community, where your dollar turns around a couple more times?”

Community solidarity and business associations to the side, rappers could just make sure they spend less in general. That’s the advice offered by Houston’s Bun B (who declares himself grateful for that city’s low cost of living, all things being equal). Not that he’s always followed that route, either. “A lot of times, you getting to counting chickens before they hatch,” he says. “You assume this is gonna happen, this verse is gonna happen, this show is gonna happen. I spent a lot of my younger years dealing with that. You know, living show to show, whatever, because we was so in the red with the record company. We never really got any back end on the record company. Because the way our deal was structured, there was almost no way that we could recoup to a point where we could get any money off the projects… You know, when ‘Front, Back & Side to Side’ was out, on Super Tight, you know, we had the No. 1 song on the radio in Houston...but the shows were few and far between. Shit, I was workin’ at a soul-food restaurant during the day, doing other shit at night. You know? It was real.”

And once they do get some money, Bun points out, young artists often fall victim to trying to keep up with the Joneses. “You can’t pop the same bottles that LeBron wants to pop,” he says. “Enjoy yourself on your level. Everybody can’t go a hundred bottles, 200 bottles. That’s okay.” Choose your cliché: Stay in your lane, play within yourself, etc. Basically, Bun says, be realistic. “Well, you not gonna win the car game, ’cause it’s already millionaires out here winning the car game. So don’t try to compete. You’re not gonna win the jewelry game, so don’t go trying to buy a bunch of jewelry, ’cause niggas already winnin’ the jewelry game. So don’t try to compete. You not gonna win the bottle-poppin’ game; niggas out here that’s already won the bottle-poppin’ game. So don’t go out there tryin’ to compete, know what I’m sayin’? What you can be doing is winning the get-out-of-rap-with-the-most-money award. That’s what you can do. ’Cause there ain’t too many people won that.”

Both Mike and Bun agree that hip-hop could use something akin to a governing board or a rules committee—something to mandate a greater and broader education, especially among the newer players on the scene. But of course, part of what makes hip-hop so vibrant is its decentralized nature. “The uniform of the athlete and the uniform of the rapper is different,” says Bun B. “When we go to work, they don’t provide our uniforms. And the way we present ourselves is the way we’re received… If you’re a football player, you paid every two weeks… Rappers…you get the advance check, but other than that, you really waiting.”

“Rappers need a union, just so they could get basic health care and that kind of thing,” Mike says. “But that’s a whole other thing… We just have to be wiser about our shit. We don’t have the luxury of having the type of money that brings A-1 accountants and business advisors and lawyers, so let’s be smarter on a commonsense, practical level. I encourage brothers to attack small businesses: nail shops, bodegas, haircutters. Anything poor people use, we got to own.”

Instituting a system to teach young artists prudent fi nancial practice might run counter to the outlaw image we like to hold for our rap stars. But the issue is something hip-hop ought to start talking about. It’s preferable to the alternative: more desperate phone calls, more repossessed vehicles. Bankruptcy lacks a certain swagger, too.

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