THE IMPACT OF NEW TAX LEGISLATION ON ACTORS AND THE ARTS : Stage, Film and TV Actors Cheery; Broadway Gloomy Over Write-Off Cuts

Representatives of stage, film and TV actors generally were cheery Monday about the new tax revision bill hammered out over the weekend by congressional negotiators. “We’re delighted,” said one official, Guy Pace.

He specifically referred to part of the bill that lets actors who earn under $16,000 and have two or more employers in the acting profession in a given year continue full deductions for such business expenses as acting lessons, resumes, agents’ fees and union dues.

But Broadway officials were gloomy over the bill’s reduction from 100% to 80% of what can be written off as business expenses for corporate entertaining. They warned that the cut would hit the box office of commercial and nonprofit theaters alike.

“Oh, sure it’s going to hurt, no question,” said Harvey Sabinson, a spokesman for the New York-based League of American Theatres and Producers, representing 250 producers and theater operators in New York and elsewhere across the country.

However, neither he nor Gerald Schoenfeld, president of the powerful Shubert theater chain, had any estimate of how badly the 20% cut would hurt the income of theaters should the bill be approved when sent to Congress for a final vote.

But “it can only hurt,” said Schoenfeld, whose New York-based Shubert Organization runs a total of 17 theaters on Broadway, in Los Angeles and four other major cities.

Officials of the Screen Actors Guild, the American Federation of Television and Radio Artists, Actors Equity and three other entertainment unions had heavily lobbied to maintain deductions that performers now are allowed.

They achieved their goal for those who earn less than $16,000 a year and represent about 80% of the performing profession, and “we’re particularly pleased about that,” said Pace, an Actors Equity executive who coordinated the lobbying effort in Washington.

He also expressed pleasure that the tax bill lets higher-earning performers continue to deduct their “ordinary and necessary business expenses” to the extent that the expenses exceed 2% of their adjusted gross income.

Noting that the bill hasn’t yet been passed, John C. Hall Jr., executive secretary of AFTRA, nonetheless issued a statement in which he called approval of the measure by a joint House-Senate tax committee “a victory for our members . . . .”

“I think it is, clearly,” agreed actor Charlton Heston, a former Screen Actors Guild president who personally joined in the actors’ lobbying effort, as did Ed Asner, another former SAG president with whom Heston often has exchanged harsh words.

“I’m very pleased,” added Heston, the star of ABC’s “The Colbys” series.

Mark Locher, a spokesman for the guild, was somewhat more subdued, saying that “we didn’t achieve everything we wanted to achieve,” including continuation of income-averaging in the new bill.

Previously, actors and others whose annual incomes sometimes widely fluctuate were allowed to average their incomes over a specified period to reduce the federal tax bite. The proposed tax measure would no longer allow this.

Still, Locher said, “we feel that the provisions (of the bill) protect the lowest-income members who need protection most . . . .”

There were no such rays of sunshine on Broadway, where Schoenfeld of the Shuberts and others feared that the cut in deductions allowed for corporate entertainment may mean less box-office business from business persons entertaining clients.

According to the theater league’s figures, Broadway, although in a much-publicized slump in recent years, grossed $225 million last season, with touring companies accounting for another $253 million. No figures were immediately available for non-commercial theaters.

The league estimates that tickets bought for business entertainment account for at least 25% of all Broadway ticket sales, with Michael Murray, a Washington lobbyist for the Shuberts putting the figure at as much as 40% to 50%.

“You have to look at it this way,” Schoenfeld said. “Since all nonprofit theaters have losses to begin with, it (the new bill) will only increase their deficit to the extent that they have corporate subscribers or corporate ticket-purchasers.”

“As for Broadway, since it is a marginal business, it (the new bill) can only be negative,” he added, saying that unlike other forms of entertainment, particularly sports, “our revenue is derived solely from the box office. We don’t have parking or television or other advertising revenue.

“So therefore, it seems to me that the performing arts could have received special consideration (from the tax-bill writers) instead of being lumped in with everybody else.”

It remains to be seen how badly the cut in tax deductions for corporate entertaining will hurt commercial and nonprofit theater if it goes into effect next year, he said.

“But it can’t do us any good,” he added. “In other words, is a little heart attack better than a big heart attack?”