Dues Discussion

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Dear Jackie::
I have a difficult time understanding how the unions are protecting the "working actor," and I am hoping you can help to clear something up for me.Why is there a cap on the income that they charge dues on? For the Screen Actors Guild, the sliding scale is 1.85 percent for income of $200,000 and under, 0.5 percent on $200,001–$500,000, and 0.25 percent on $500,001 to a maximum of $1,000,000.

So if an actor stars in one film in a three-year period, does nothing else, and is paid $15,000,000 for that film (excluding residuals, to keep it simple), he or she would pay $116 in base dues for two years and $6,442.50 for the year that he or she was in the film. That is a total of $6,674.50 over the three-year period, or 0.00031 percent of income. An actor making $250,000 a year for three consecutive years would pay a total of $11,835 to SAG for the $750,000 in income, or 1.578 percent of income. Lastly, an actor making $25,000 a year for three consecutive years would pay a total of $1,387.50, or 1.85 percent of income.

Somehow that doesn't look like it is protecting the "middle-class" or working actor to me.

New York

Dear Debbie:
Oh no! I became an actor so I wouldn't have to do math!

All right, I've calmed down. I can see why you'd question a system in which people earning less pay a higher percentage of income in dues than people earning more. Pamela Greenwalt, SAG's communications executive director, responded to your query in an email:

"While our dues are based on income and include caps, it is important to recognize that the services we provide to the higher-earning actors the reader mentions are no more costly than those we provide to all other actors. Since claims, residuals, arbitration, and other functions and processes of the guild are essentially project-based, someone who works 20 projects a year is likely to use more services than someone who works one or two. The caps help the guild maintain a level of proportionality in the way dues are calculated and collected across the membership. Ultimately, the dues structure is determined by the board and the members and is a balance between higher-earning members subsidizing the guild's activities and working actors paying the cost of the services they use. We work hard to make sure that balance is as equitable as possible."

Our federal income-tax system works the other way around, with higher earners paying a higher percentage of their income in taxes. Folks earning up to $16,700 per year pay 10 percent, while those earning between $67,900 and $137,050 per year pay 25 percent. The scale tops off at 35 percent, for those earning $372,950 and more per year, so there's no difference in tax rate between someone earning $375,000 and someone earning, say, a gazillion dollars.

I sent Greenwalt's response to actor and accountant Chuck Sloan of Sloan and Associates for more help in unraveling the issue. Sloan, who also writes the Actors' Taxes column for Back Stage, feels that SAG's rules make sense.

"The guild's answer is actually quite accurate, although to the low-paying actor it may not seem fair on the face of it," he wrote in an email. "It is important to understand up front that there is a limitation on the amount of income that an employer must report to the SAG Pension and Health Plans (SAG gets all of its earnings figures from the Pension and Health Plans) on any actor's contract, as a result of Internal Revenue rulings. A movie, for example, is considered one project from one employer. Let's say I get paid $10 million for one film. That one employer only has to report $232,000 to SAG per job. So even though I actually made $10 million, all SAG learns is that I made $232,000. If I do two different highly paid projects for two separate employers, then SAG learns I made $464,000 for the year and perhaps whatever I may have made in additional residuals—no matter that I may have actually made $20 million.

"It's also important to look at who makes use of union resources," Sloan continues. "If you understand that the basic cost of enforcing any element of the contracts costs the same to the union regardless of the end result of a claim itself, then an actor who is working more often for less money will usually have more issues more often than a high-profile actor who makes more money on fewer projects. Some of the most common problems that SAG deals with are from background actors who work for $120 a day. They file claims when a member feels he or she hasn't been paid properly for an extra set of clothes brought to the set or for overtime he or she may think wasn't paid. The clothing claim may be for $25 or less, and the overtime claim may be for less than $50. Or, using an example of a day player with a late-residual claim, they may be seeking $800 or $900 or so—if you include some penalties. Any income is incredibly important to the actor trying to pay his or her rent, but the dues of either of these members typically won't cover the cost of processing their claims. An actor who makes significantly more money on a project will typically make use of outside sources to pursue a legal claim before going to the union for assistance. Compare that to the typical working actor, who must depend on SAG to enforce contracts."

This makes perfect sense, but when you compare it to the federal tax system, you have to wonder: Why does our national government do it the other way around? We all get the same roads, public parks, and government officials, but the wealthy don't often use the public schools or programs like unemployment, which earners in lower tax brackets may be taking advantage of. If the IRS took its cue from SAG, the folks at the bottom of the income stream might pay for more of the services they use, while the folks at the top would keep more of their money, since they use fewer services.

But the folks at the bottom, by definition, can't afford to pay more. And should we ask them to? One could argue that we all, rich and poor, benefit from a healthy society and that we should give according to our abilities, not according to our need. The real housewives of Orange County benefit from shelters that keep the homeless off their shiny streets, just as the destitute benefit from free meals. Then again, the federal tax code seems to give plenty of loopholes to high earners.

Honestly, I don't understand tax law or SAG dues well enough to get up on a social-responsibility soapbox, but I think that what Greenwalt says about SAG governance might be the most important point to consider: SAG rules are made by an elected board and members. The more middle-class actors get involved, the more they'll be able to advocate for changes they feel are important.

Any questions or comments for The Working Actor? Please email Jackie and Michael at [email protected].