How will the new GOP tax bill affect actors and filmmakers in the film industry?
A new report by The Hollywood Reporter conducted by Actors Equity shows taxes rising as much as 300% for many actors, writers, directors, and crew.
About the GOP Tax Bill:
On Wednesday, Congressional Republicans agreed on a new bill that eliminates common deductions for agent and manager commissions, union dues, training classes and other business expenses but, preserving deductions of those items for high-earning talents, who use an accounting feature called a loan-out corporation.
How does a loan-out corporation work?
According to Forbes, “The loan out corporation receives monies from contracts with other businesses and pays a salary to the entertainer for services performed. Meanwhile, the loan out corporation provides essential services to the entertainer, from accounting and legal, to coaching and agency fees. All business expenses incurred are deductible because the entertainer is officially an employee of the loan out company.”
How will the new GOP Tax Bill affect actors?
According to the analysis, some working actors could see their taxes nearly quadruple. As THR explains, “the poor suffer the worst increases, the middle-class gets hit hard, and the wealthy benefit from tax cuts.”
Equity secretary-treasurer Sandra Kaas, who is also a practicing tax lawyer, prepared her estimates. She said in an interview the new tax bill, “will change the math on how long people can stay in the industry.”
Using real tax-returns from working actors, here are a few examples of how the new tax bill will affect actors, according to The Hollywood Reporter:
* An actor who earned about $97,000 (about three-quarters from pension and investments) paid $12,434 in taxes, but would have paid $15,579 under the new law, an increase of $3,145 or 25 percent.
* Another actor, who earned over $87,000 paid $9,665 in taxes, but would have paid $13,294 under the Republican legislation, an increase of $3,629 or 37 percent.
* An actor who earned about $28,000 paid taxes of $513 but would have paid $1,726 if the new law had been in place, an increase of $1,213 or 236 percent. That means his/her taxes more than tripled.
* A married couple, both performers, who earned about $65,000 (or about $32,000 each) paid $1,228 in taxes but would have owed $4,535 under the new law, an increase of $3,307 or 269 percent. In other words, their taxes nearly quadrupled.
Ultimately, business expenses add up to 20% to 35% of a worker’s income, and none of it will be deductible anymore unless an actor creates a loan-out corporation.
You can read the full analysis and report here.
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