With the nation’s tax bill inching closer, more than a dozen companies and businesses are changing how they produce, distribute and market films, as the film business grapples with what might be called a “sudden” tax increase.
The change, outlined in a draft of the tax bill being circulated by lawmakers, comes as the industry seeks to reduce its overall tax bill and keep some of its top executives, executives and other employees from taking home the bulk of their compensation.
Some industries are changing the way they produce and distribute films and are trying to make it more difficult for competitors to outcompete them, such as film production companies that have sought to streamline their business models by offering fewer incentives for companies to hire new workers.
The draft version of the legislation, which is scheduled to be approved by the full House on Wednesday, is the first step in an effort by lawmakers to ease the way for companies that are currently subject to federal income taxes to avoid paying them at all, and the first draft of a tax bill that includes the kind of sweeping changes the industry has been seeking.
As the draft version moves through the House and Senate, there are some changes to the tax code that have already caught the attention of the film industries, which are concerned about the impact of the bill on their businesses.
The legislation does not make significant changes to current tax rates or deductions for individual filers, according to people familiar with the deliberations who asked not to be identified because the legislation is still being worked out.
The draft legislation would leave many existing deductions untouched, including the deduction for state and local taxes, which can be significant to businesses.
The bill would not repeal the individual and employer income tax rates.
It is unclear whether the draft bill would affect companies that already file their federal taxes using a method that has changed recently, such a computerized system that can be used to deduct the amount of the federal taxes paid.
The Senate Finance Committee on Wednesday is expected to hold a hearing on the tax legislation and to discuss whether to pass the tax overhaul, a development that could prompt changes to tax filings.
The bill also contains a provision that would allow companies to deduct some of their tax payments from the amount they owe.
That provision, known as a “tax shelter,” is likely to be a boon to some companies that don’t file their tax returns using a computer, people familiar have said.
The House version of this tax bill, which was released last week, is not expected to be voted on until early next week, with most Republicans opposed to the legislation and many Democrats willing to consider it.
The Senate Finance and Ways and Means committees are expected to begin hearings on the final draft of this legislation on Wednesday.