Friday, August 18, 2006

The IRS Nixes Popular Hollywood Swag Packages

In one of yesterday's posts, I blogged about the strong condemnation of terrorist organizations Hamas and Hezbollah in a full-page Los Angeles Times advertisement by a number of top movie stars. Well, it turns out today's interesting bit of news on Hollywood is the IRS's decision to impose tax consequences on the receipt of "swag" gifts (loot) by presenters at glamorous awards ceremonies. Here's the Times' story, indicating that the Academy of Motion Picture Arts and Sciences has already eliminated the distribution of the expensive gift baskets for next year's Oscars:

Gift bags and swag suites have exploded in recent years, as clothing companies, hotels, cellphone manufacturers and the makers of seemingly every imaginable kind of consumer goods (chocolates, lingerie, cufflinks, sunglasses, luggage, etc.) dole out items to celebrities in the hopes of garnering free advertising when those celebrities are photographed wearing those shoes or chatting into that cellphone. The value of the Oscar gift basket, a tradition that dates to the 1970s, has approached $100,000 in recent years. Top celebrities at this year's Sundance Film Festival — such as Steve Carell and Terrence Howard — had the opportunity to come home with plasma televisions, vouchers for weeklong vacations at posh resorts and even $10,000 discounts on Las Vegas condos for sale. Around awards shows as diverse as the MTV Movie Awards and the ESPYs, swag suites are erected to give celebrities free shopping sprees. The IRS couldn't help but notice. "There was an awful lot of publicity about the ever-increasing value of these baskets," IRS Commissioner Mark V. Everson said. "And somebody said, 'Why don't we do something about this?' It was just so clearly taxable we felt we had to step in." The IRS reminded Oscar presenters before this year's ceremony that noncash compensation was just as taxable as a paycheck. Everson said the effort was linked to his drive to bring "a sense of fairness that resonates throughout the system. You can't let the rich get away with something." Sid Ganis, the academy's president, said the gift baskets had outlived their usefulness. "I don't think a presenter says, 'I am going to present an Academy Award because I am going to get a gift basket.' They do it because they want to be a part of the show."
Really? The swag packages had "outlived their usefulness?" Or is it that the elite, super well-compensated Hollywood presenters don't want to increase their tax liability? Too bad we don't have some hard data on the ideological orientation of the Academy's membership, because there's interesting irony here, in that the movie community's supposedly overwhelmingly liberal, and as contempory liberal ideology supports progressive taxation as underpinning the interventionist state, one might assume there'd be little objection to boosting payments to Uncle Sam as a consequence of these luxurious gift items. I guess it's one thing to posture as a liberal activist, denouncing conservative domestic and foreign policy. But on fiscal matters, it's another thing, and maybe the Academy has a lot in common with the GOP's position on taxes?

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