Share

Opinion: Columnists

Sunday Reflection: Time for Hollywood to pay its fair share

|

At the Democratic National Convention, Eva Longoria said that she should be paying higher taxes. I agree.

Actually, what she said was: "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."

I'd actually go further than that. 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 That tax was repealed in the 1950s -- I guess we could call that the "Hollywood tax cut," since we're still talking about the "Bush tax cut" in 2012.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.

But, hey, by that time, we were bringing the debt under control. 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.

View article comments Leave a comment