Hollywood and the Income Tax, 1929–1955

Abstract

This article argues that a dynamic relationship existed during the 1929–1955 period between the Hollywood film industry and the United States income tax system. The relationship functioned on three levels. First, steep marginal tax rates impacted film production, encouraging certain highly paid actors and directors to work less in the 1930s, form corporations in the 1940s, and live and work abroad in the 1950s. Second, Hollywood played a key role in the popular cultural discourse surrounding the income tax. Third, Hollywood itself influenced the income tax system, most significantly through the career of actor-turned-politician Ronald Reagan. Drawing on extensive legal scholarship and numerous archival sources – including the legal files of the Warner Bros. Archive and the John Huston, William Wyler, and George Cukor Papers housed at the Academy of Motion Picture Arts and Sciences – the article suggests that the implications of Hollywood’s relationship with the income tax reach beyond industrial film history into American cultural and political history.