Motography (Jul 1918)

July 13, 1918. MOTOGRAPHY 63 Stars Fight Heavy Income Tax REPRESENTATIVE EXPLAINS STAND AT WASHINGTON POINTING OUT that the high salaries of stars are largely the realization of investments in long and poorly paid apprenticeships, Grant Carpenter of Los Angeles, on behalf of the Motion Picture War Service Association, appeared before the Ways and Means Committee of the House of Representatives at Washington last week and made a strong plea for the separation of earned from unearned income in the proposed revision of the war excess profits tax. The committee was told by Carpenter that the life of a star was not more than five years, and while he or she might earn a large income during the period of popularity that the time came always when the big income stopped. The stories regarding the big incomes paid the stars, Carpenter said, were exaggerated and while he knew of one star paid $500,000 a year and several who got nearly that much, very few were making $200,000 and from that figure there was a big drop to the majority. Cites One Stars Case "I have in mind a woman who began only last year, after many years of poorly paid apprenticeship, to earn large sums of money," he said. "Her intangible capital is the experience and the knowledge of her art she has accumulated and upon which she has only begun to realize. The tax, as now applied, takes almost half of her earnings. "In the nature of her business she cannot expect under the most favorable conditions to enjoy the popularity that brings her this income for more than a few years — five at the outside — and the hazards and risks of her employment, a brief illness or a scar on the face, may end her earning power at any moment for all time. During that period she may be taxed anywhere from 25 per cent to 50 per cent of her earnings of a lifetime, and in the end her capital is gone. Makes A Comparison "On the other hand, take a man with a similar income derived from dividends. This man's income would not be taxable at all under the excess profits law, nor would he pay the normal income tax; so that when the war is over and the tax removed this individual's capital would be unimpaired, and he would perhaps enjoy a larger income on the increased valuation of his property through no effort of his own." Mr. Carpenter suggested the following changes: "That a heavier tax be levied on unearned incomes than on earned incomes, no person to be allowed an unearned income of more than $50,000 annually, but below this and in excess of $5,000 the unearned income to bear a graduated tax. "That income derived from occupations based on personal service and having no relation to the war be excluded from the operations of the excess profits tax. Urges English Plan "That the excess profits provisions be changed to conform to the English procedure: That is, taking 80 per cent of the actual war profits, with a special provision that where such profits are derived altogether from the manufacture of articles essential to the prosecution of the war, all in excess of normal pre-war profits be taken by the government; and in business that had no pre-war existence all profits above reasonable earnings on the invested capital be taken. "That a direct emergency tax at graduated rates be imposed upon accumulated wealth, inherited or unearned, in any form whatsoever, in excess of a principal of $250,000, with provisions that will prevent a shifting of the burden during the war and for ten years thereafter. "That a heavy direct tax be placed on the membership of social and country clubs and upon private homes in excess of the valuation of $40,000. "That a direct tax of 1 per cent be placed upon all accumulations of wealth in excess of $200,000 when earned by the possessor, 2 per cent on similar accumulations which have been inherited, 3 per cent on such inheritances in the second generations, and 4 per cent on all inherited wealth belonging to persons residing permanently abroad." The Motion Picture War Service Association, which Mr. Carpenter represented, is the organization recently formed by the Southern California film colony at a rousing meeting in Clune's Auditorium, Los Angeles. While organized primarily for war service, it is being utilized for solving all the problems that affect those engaged in actual production. Loew Books Capitol Comedies "Smiling Bill" Parsons of capitol comedies is shortly to project his beaming presence upon the gaze of audiences in about thirty Loew theatres in Greater New York. The Loew offices have just contracted with Goldwyn, which distributes the comedies, for 110 days' booking. Carlyle Blackwell and Evelyn Greeley in their new World feature, "The Golden Wall."