Behind the Scenes: How Celebrities Navigate Taxes Through Corporate Entities
Celebrities like Cynthia Nixon, Mark Ruffalo, Ilana Glaser, Mandy Patinkin, George Takei, and Morgan Spector have shown their support for Zohran Mamdani, who is advocating for higher taxes on millionaires. However, these actors may not be affected by the proposed tax increase as they often receive their income through corporate entities rather than personal W-2 forms. According to a New York-based CPA, individuals in the entertainment industry, including actors and actresses, commonly use "loan-out" companies like S-corps or LLCs to report their income to the IRS. This setup allows income to pass through to the shareholder's personal tax return, with the corporate tax rate in NYC being significantly lower at 8.85% compared to the 52% top marginal rate that Mamdani is suggesting. This difference in tax rates may explain why these celebrities are supporting Mamdani's tax proposal, as it would not directly impact their personal tax liabilities.
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