A study of the GOP tax plan by Actors Equity, a union that represents stage actors, found some of their working- and middle-class members would see their annual tax bill increase dramatically. The stage actors union was joined by the Screen Actors Guild, which represents movie talent, in opposition to the plan. Now that it’s been signed into law, actors and those behind the camera are scrambling to get prepared.
Some entertainment workers in Georgia worry the new law could have some ripple effects in the larger economy and ding an industry that Georgia has fervently courted with generous tax incentives.
The Hollywood Reporter, an online news site covering the entertainment industry, reviewed actual 2016 tax returns proffered by Actors Equity to see how the tax changes would affect those taxpayers. It's not an unbiased study by any means, but the actors behind those returns could face a big tax hike.
One married couple earned a combined $65,000 as full-time performers. They paid $1,228 in federal taxes in 2016, but under the new law their tax bill grew almost four-fold to $4,535, according to the Reporter.
The primary cause of the anticipated increase is the elimination of deductions for things like agent commissions, acting classes, and not incidentally, union dues.
For many taxpayers, the loss of individuals deductions is offset by a higher standard deduction. The aim is to streamline filing for many Americans by requiring fewer to itemize their returns, but the math doesn’t work for many in the entertainment industry because of a quirk in how they make their living.
Most actors, screenwriters and production workers like camera operators, grips and make-up artists are freelancers, moving from job to job. But they are paid as employees and treated by the IRS as such.
The tax bill’s elimination of unreimbursed employee business expenses won’t hurt most workers because in current law most workers did not have enough unreimbursed expenses to qualify for it. But workers in the entertainment industry often rack up thousands of dollars annually in classes, special equipment, travel, commissions and other costs built into their end of the industry.
Those starting off hit hardest
It's disappointing for actors like William Tokarsky, whose career is just beginning to take off with what he called "a decent little role" in the recently released "Jumanji," parts of which were filmed in Georgia.
Tokarsky is a very Georgia kind of Hollywood success story. Nearly a decade ago, he decided to visit and gawk at Robert Duvall and Bill Murray at a shoot for "Get Low," an indie feature filmed around metro Atlanta.
“I never did see them but I talked to some people who worked as extras and it looked like fun,” he said.
Tokarsky had recently retired from the Doraville GM plant and had time on his hands. One thing led to another. He moved from extra work to small speaking parts to somewhat-less-small speaking parts. He's not a star by any means, but he gets regular work.
“For some reason the camera seems to like me,” he said, laughing.
Unlike most struggling actors, Tokarsky has a pension and doesn’t rely on his movie money to survive. Still, the tax changes are not welcome.
“There are a lot of people who are like me who have entered this industry and are now starting to see the rewards of it,” he said. “It’s not going to kill me, but it’s going to break to my heart.”
He was toying with the idea of buying a new computer to help scout for audition opportunities and communicate with others in the industry, but knowing he can’t write any of it off he said he might just wait.
Most movie stars already file their taxes through a corporate entity and won’t be greatly affected by the change. But actors who are building their careers and the blue-collar members of the production team behind the camera will take a hit.
Thomas said just the inability to deduct mileage to and from meetings with executives is “a huge problem.”
“We take a lot of meetings,” he said. “It’s not like a paid thing. As a screenwriter, I go meet people all over the city.”
Many expenses no longer deductible
Tara Ansley, a film producer who grew up in Peachtree City, said the tax changes should serve as a wake-up call for workers in the entertainment industry to do the things they should have been doing all along. That begins with getting an accountant who knows the film business.
“It’s not something they should figure out on their own,” she said. “If you go on Facebook, that is not the best situation to figure out a work-around for your taxes.”
Ansley said she does not expect the changes will dramatically affect low-paid, entry-level workers, like production assistants, but established members of the film community need to talk with an expert about incorporating.
“It’s the people who are making in the six-figure range,” she said. “Most of us, if we have been in the business for a while, we already have LLCs.”
Thomas said the tax changes are bound to have an effect on the industry in Georgia, which has depended on a large, modestly paid professional workforce.
“For every mega-movie star you see there are 1,000 people supporting them from below,” he said. “I’m in the industry and I’m still learning about all the positions.”
The loss of those deductions is expected to ripple across the industry. In Georgia, that could affect a lot of workers. According to U.S. Census data, the past decade has seen workers in the state’s motion picture industry grow ten fold to more than 22,000.
That size workforce has created a lot of ancillary jobs. For instance, a lot of small studios have sprung up around Atlanta to give aspiring actors space to make audition tapes. With the fee for making those tapes no longer deductible, fewer actors may queue up to make them on spec.
It may also mean that low-paid actors may be choosier in paying for traditional networking events. That’s worrying to Charles Judson, programming director for the Terminus Conference and Film Festival in Atlanta.
“The workshops we put on, the conference, the festivals. Being able to write that off encourages people,” he said. “This is really going to be a disruption.”