In a column for the Hollywood Reporter, Senior Editor Eriq Gardner notes that Hollywood’s major film industry players — who have often been the most vocal critics of President Donald Trump and his administration’s policies — could actually be among the greatest beneficiaries of the president’s proposed tax cuts.
If Donald Trump gets his way on tax reform, Hollywood actors, directors, and writers stand to be among the biggest beneficiaries. Understanding why takes some appreciation of the fact that the entertainment industry isn’t just five big corporations, but also thousands of smaller ones — almost all incredibly obscure even if their owners are quite famous.
As the tax code currently stands, the richest individuals pay almost 40 percent on individual income (or less after deductions). Businesses pay a separate rate, which Trump wishes to set at 15 percent. Most importantly, the proposal outlined by the Trump Administration has this latter rate being applied to all businesses, including “pass-through” organizations like S corporations that distribute a salary to employee-owners and count the rest as profits. Under the current law, personal income and business income is taxed roughly the same, but if Trump succeeds, many folks may aim to establish mini-corporations for themselves to get their taxes down to 15 percent.
Guess what? Many in Hollywood are largely set up already thanks to “loan-out” corporations that contract out services like acting and directing to production studios. Alas, alongside the 21st Century Fox’s and Time Warner’s come Kaling International (Mindy Kaling), Kimsaprincess Inc. (Kim Kardashian), Snooker Doodle (Emily Deschanel), Rogue Marble (Sylvester Stallone) and so forth.
Read Gardner’s full column at the Hollywood Reporter.