Time to end the Hollywood tax cut and subsidies

On the last night of the Democratic National Convention in Charlotte, NC, if you had tuned in to one of the major TV network stations, you might have thought you’d stumbled across a Hollywood awards ceremony. There on the stage were Eva Longoria, Scarlett Johansson and Kerry Washington dressed up and giving speeches during prime time; Tom Hanks narrating a tribute to veterans; Mary J. Blige and the Foo Fighters performing; and James Taylor making folksy jokes against a backdrop of wilderness pictures.

Obama girls (l to r): Washington, Johansson, Longoria

Excepting the Foo Fighters, altogether, the net worths of these celebrities total more than half a billion dollars ($528 million). Eva Longoria’s is estimated to be $35 million; Scarlett Johansson’s is $35 million; Kerry Washington’s is $3 million; Tom Hanks’ is a whopping $350 million; Mary J. Blige’s is $45 million; James Taylor’s is $60 million.

But every one of their speeches emphasized their working-class roots and their solidarity with the poor and downtrodden. As an example, Johansson plaintively declared, “I speak to you not as a representative of young Hollywood, but as a representative of the many millions of young Americans, particularly young women, who depend on public and nonprofit programs to help them survive.”

Since most of the denizens of Hollywood, like the celebrities who pimped for Obama at the DNC, are Democrats and favor the party’s policy of wealth redistribution (listen to Obama declaring he favors redistribution in 1998), it is only fair that Hollywood actually participate in redistributive social justice by paying its “fair share.” I’m sure Hollywood liberals are just sick and tired of being called “limousine liberals” (just another expression for “hypocrites”)!

As a matter of fact, Eva Longoria said at the DNC that she should be paying higher taxes: “The Eva Longoria who worked at Wendy’s flipping burgers — she needed a tax break. But the Eva Longoria who works on movie sets does not.”

Glenn Reynolds writes for The Examiner, Sept. 15, 2012, calling for an end to the 20% tax cut enjoyed by Hollywood since the 1950s:

It’s not just Eva Longoria who doesn’t need a tax break — it’s her entire industry, which has enjoyed favorable tax treatment in all sorts of ways, at both the federal and state levels, for years. And now, with the federal government and the states in parlous financial condition, it’s time for those fat cats to shoulder more of the burden. Why should burger flippers at Wendy’s have to cover the national debt while Hollywood moguls enjoy yachts, swimming pools and private jets?

The last time America was this deep in debt was the end of World War II. One of the ways we paid the debt down was through a 20 percent tax on the gross receipts of movie theaters. (That’s right — gross, not net.) That tax was repealed in the 1950s — I guess we could call that the “Hollywood tax cut,” since we’re still talking about the “Bush tax cut” in 2012. To secure that repeal, Hollywood launched a major PR campaign about how taxes kill jobs and hurt prosperity. We haven’t heard that kind of talk from them since.

[...] Now, we’re facing debt levels similar to those we faced after World War II, and it seems entirely appropriate to respond with similar measures. Of course, technological change means we’d need to update the 20 percent tax to apply not only to movie theaters, but to DVD sales, movie downloads, pay-per-view and the like. That just means more revenue, which should please Eva Longoria.

And that’s just the beginning. To be sure that fat cats are paying their fair share and not getting away with things that Wendy’s workers can’t, it’s time for the Internal Revenue Service to crack down on Hollywood’s shady accounting practices, which let studios make even highly successful films look like money losers. (Just look up “Hollywood accounting” on Wikipedia.) I feel sure that if the IRS took a hard look at studios’ and producers’ books, they could squeeze out a good deal of additional revenue. Wendy’s workers don’t get to engage in that kind of fancy accounting. Why should Hollywood?

Meanwhile, cash-strapped states need to take a second look at their extensive film subsidies. A recent study by the Louisiana Budget Project found that despite costing a billion dollars or so over the last decade, Louisiana’s film subsidy project hadn’t accomplished much for the state. “Unfortunately, the returns to the state on this investment, like many of the movies made here, have been a flop. While the subsidies have helped create film industry jobs that weren’t here before, many of these positions are temporary and have come at a steep cost to taxpayers.”

I suspect the same is true in the many other states that have subsidy programs to encourage Hollywood to film there. The main payoff for these programs — and “payoff” is, I think the right word — is that they let state politicians hobnob with the occasional Hollywood star. Why should they do that with taxpayer money? Wendy’s burger flippers can’t.

The more I think about it, the more I think Eva Longoria is right. She should be paying more in taxes, and so should her entire industry. Perhaps under the next administration, they will.

Examiner Contributor Glenn Harlan Reynolds is a University of Tennessee College of Law professor and founder and editor of Instapundit.com.

~Eowyn

7 responses to “Time to end the Hollywood tax cut and subsidies

  1. The film industry in Hollywood is heavily unionized. Every craft, including actors, has a union that specifies wages, working conditions and contracts with the production side of the industry. These million-dollar lefties should work for union wages. It’s all about fairness, right?

  2. Thank you Dr. Eowyn for this post about Hollywood. I say then, supporting Eva, that we should reinstate the movie tax and since we are in such dire straits economically, it should be at least 30% of the gross monies made on movies. That way, Eva, this will help you practice what you preach.

    I am sick about James Taylor. I used to sing his songs in high school and college so much, playing a 12-string guitar singing “Sweet Baby James” and “You’ve Got A Friend.”

    Hollywood wants to appear benevolent and kind towards people who are experiencing economic problems. We do them no favors not helping them to get back on their own two feet and to become employed. Instead, this administration encourages slothfulness and the philosophy of being laid back and we will take care of you. Nothing is a worse violation on human dignity and potential human talent than to kill it as this administration has done. Wake up Hollywood and see what is really happening here!

  3. “a 20 percent tax on the gross receipts of movie theaters”?

    OH, The Horror.

  4. Cough up more money then Eva and send a big fat check to the government right now!

  5. If Eva wants to pay higher taxes, she should just cut the IRS a check.

    Notice she hasn’t.

    Neither have the others.

    There is no hypocrisy quite like Hollywood hypocrisy.

    -Dave

  6. IMO, Hollywood will be hurt if the government quits with the handouts….think about it.

    My husband and I went to see a movie awhile back and ran into a couple who live in our community. It was the same couple that brags about having their daily child care completely paid for by the government. Couples like this might actually have to give up luxuries (like movies, ringtones, HBO etc.) if the government handouts stop(which they SHOULD).

    Obama is Eva’s job security. :D

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s