Federal income tax and the performing artist.

摘要

This dissertation examined a discriminatory income tax penalty that affects performing artists comprised of actors, directors, producers, writers, and other employees who obtain employment through agents and managers. It appears that this tax penalty primarily affects lower-income employees, who in order to obtain employment, must incur high commissions and other employee business expenses. Higher-paid performing artists could also be subjected to tax penalties such as the Alternative Minimum Tax and additional limitations on itemized deductions. The frequent result of these tax penalties is that performing artists could pay a higher tax rate than other taxpayers who earn the same level of income. The phenomenon of an average tax rate that increases as income is declining should not happen under the progressive tax system and is contrary to the national tax policy reflected in the Internal Revenue Code.;This study utilized a quantitative research design. Excel spreadsheets and two commercial tax preparation softwares were used to study research questions 1 and 2. Government data and studies made by the California Rand Corporation were used to study research question 3. A panel of three experts examined the validity of the data and methodology used to evaluate the results of the study.;In general, the results of this study confirm that a significant number of performing artists are subjected to horizontal inequity, and that Congress's intent to reduce the tax burden on performing artists with the enactment of Internal Revenue Code section 62(a)(2)(B)(3) was only partially successful. This dissertation concludes with a proposal for a simple modification of the existing tax law, which if enacted, will remove this tax penalty and thus restore a more equitable distribution of the tax burden. This proposal will result in a negligible economic impact and a minor loss of revenue to the Unites States Treasury.;The primary objectives of this dissertation was to study three research questions: (1) What are the effects of horizontal equity upon performing artists versus statutory employees under the current tax law? (2) Was Congress's intent to reduce the tax burden on performing artists achieved with the enactment of Internal Revenue Code section 62(a)(2)(B)(3). (3) What is the potential loss of revenue to the United States Treasury if a proposed modification to the existing law is adopted in order to alleviate horizontal inequity found in research question 1?