Our Modern Entertainment Industry Has an Ancient Tax Code (1)

If you watched the original “Top Gun” in a movie theater back in 1986, you probably had no idea you were witnessing film history. It wasn’t just because you saw Tom Cruise cement his stardom—that year a new law gave middle-income actors tax relief in the form of the qualified performing artist deduction.

The tax deduction allowed performers earning up to $16,000 to deduct expenses on their yearly taxes, similar to a small business. Suddenly, actors who didn’t have their names on the marquee had access to sorely needed relief during tax season. Unfortunately, nearly 40 years later, that tax deduction still only allows actors earning up to $16,000 to deduct work-related expenses, while the median household income has increased nearly $30,000 and inflation is up over 170% since its inception.

That’s why Rep. Vern Buchanan (R-Fla.) and Rep. Judy Chu (D-Calif.) introduced the Performing Artists Tax Parity Act, or PATPA last month. It would bring the qualified performing artist tax deduction into the 21st century and expand the benefit to cover a broader swath of actors and entertainers. In addition, it would tie the tax deduction to the consumer price index, automatically scaling alongside inflation and affording qualifying actors the same relief as the rest of the middle class.

PATPA ensures that, in the entertainment industry, the middle class is included in the calculus when deciding how to reform tax laws. It would help bolster acting and the performing arts as a more viable career path for those earning closer-to-median incomes.

At SAG-AFTRA, we figure prominently in moving our industry forward when it comes to material change for actors, journalists, radio personalities, recording artists, producers, content creators, models, and other artists and entertainers. So we have a clear-eyed understanding of the demands that come along with all these lines of work.

And we know that costs associated with travel, training, and commissions for supporting staff and management make entertainment work financially prohibitive for many who are barely getting by, despite their pivotal roles in the immersive experiences we all enjoy on our screens.

PATPA is a much-needed step to recognize hardworking performers who bring to life every story, and fill every scene to create a world that comes alive on screen. As in so many industries across America, these workers contribute countless hours and resources to their craft. And yet they face significant career barriers and lack stability over the medium and long-term.

When we want more investments in research and development, we create a tax environment that makes those investments possible. When the government wants to increase homeownership, they tinker with the tax code to make signing that mortgage more financially feasible.

Those not-famous, not-rich, hardworking, middle-class Americans deserve an updated performing arts tax parity act that reflects realistic earnings and deductions in this century—not the last one.

The entertainment industry contributes around 4.4%, or $1.02 trillion, to US GDP. Additionally, over 4 million people are employed in this industry, which is vitally important to America’s economy. It’s powered by the very workers whose livelihoods could hinge on a tax code that should reflects an understanding of the difficulties that come with being a journeyman actor.

We know this is true because this relief was briefly granted previously. But the Tax Cuts and Jobs Act of 2017 disallowed the miscellaneous itemized deductions that our members routinely used for the up-front costs of training and performing as an actor. In the absence of the miscellaneous itemized deduction, it’s vital that policymakers take advantage of the opportunity presented by PATPA.

To this point, the bill has 92 cosponsors from 27 different states and was introduced in the Senate by Michael Bennet (D-Colo.), Mark Warner (D-Va.) and Bill Hagerty (R-Tenn.). We hope this support continues to grow, as each new cosponsor represents another step taken towards showing American entertainment and arts the appreciation that it has so rightly earned.

When you watch your favorite programs with your family, enjoy yourself knowing that you did the right thing by supporting PATPA.

Read more: Working-Class Performers and Artists Need Our Country’s Support

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Fran Drescher is national president of the 160,000 member Screen Actors Guild-American Federation of Television and Radio Artists. A career actor, Drescher produced and starred in the hit television sitcom “The Nanny.”

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