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We have a modern entertainment industry, but an ancient tax code

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If you saw the original Top Gun in theaters in 1986, you probably didn’t know you were witnessing movie history. And it’s not just because you’ve seen Tom Cruise solidify his stardom—that year, a new law gave middle-income actors a tax break in the form of the qualifying performing artist deduction.

The tax deduction allows performers earning up to $16,000 to deduct annual tax expenses, similar to small businesses. Suddenly, actors with no names on the marquee got much-needed tax season relief. Unfortunately, nearly 40 years later, this tax break still only allows actors earning up to $16,000 to deduct work-related expenses, while median household income has increased by nearly $30,000 and inflation has risen by 170% since 2018. % above. start.

That’s why Rep. Vern Buchanan (D-Fla.) and Rep. Judy Chu (D-Calif.) introduced the Performing Artists Tax Parity Act (PATPA) last month. It would bring the qualifying performing artist tax credit into the 21st century and expand the benefit to a wider range of actors and entertainers. In addition, it links tax credits to the consumer price index, which automatically scales with inflation, and provides eligible participants with the same credits as the rest of the middle class.

PATPA ensures that in the entertainment industry, the middle class is taken into account when deciding how to reform the tax code. This will help promote acting and the performing arts as a more viable career path for those earning close to the median income.

At SAG-AFTRA, we are instrumental 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 effect. So we have a clear vision of the needs that come with all these lines of work.

We know that the costs associated with travel, training, and commissions to support staff and managers make entertainment jobs financially prohibitive for many who are struggling to get by, despite their critical role in the immersive experiences we all enjoy on screens effect.

PATPA is a much-needed step in recognizing hard-working performers who bring each story to life and fill each scene to create a world that comes to life on screen. Like many industries in America, these workers contribute countless hours and resources to their craft. However, they face significant career hurdles and lack stability in the medium to long term.

When we want to invest more in research and development, we create a tax environment that makes those investments possible. When governments want to increase home ownership, they change the tax code to make it more financially viable to sign out for mortgages.

Those unknown, not rich, hardworking middle class Americans deserve an updated Performing Arts Tax Parity Act that reflects real income and deductions for this century, not the last.

The entertainment industry contributes approximately 4.4 percent, or $1.02 trillion, to US GDP. Additionally, over 4 million people are employed in the industry, which is critical to the US economy. It is powered by workers whose livelihoods may depend on tax laws that should reflect an understanding of the difficulties skilled actors face.

We know this to be true because this relief was briefly granted before. But the Tax Cuts and Jobs Act of 2017 does not allow the miscellaneous itemized deductions that our members often use as upfront expenses for training and acting as actors.In the absence of miscellaneous itemized deductions, it is critical for policymakers to take advantage of the opportunities provided by PATPA.

So far, the bill has 92 co-sponsors from 27 different states and is led by Michael Bennett (D-Colo.), Mark Warner (D-Va.) and Bill Haggerty (R. -Tenn.) in the Senate. We hope this support continues to grow, as each new co-sponsor represents another step toward showing American entertainment and the arts the appreciation they deserve.

When you’re watching your favorite shows with your family, you’ll appreciate knowing you’re doing the right thing by supporting PATPA.

read more: Working Class Performers and Artists Need Our Nation’s Support

This article does not necessarily reflect the views of Bloomberg Industries plc, the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

author information

Fran Drescher National President of the 160,000-member Screen Actors Guild – United Television and Radio Artists of America. As a professional actor, Drescher produced and starred in the hit sitcom “The Nanny.”

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