Dwight D. Eisenhower photo

Memorandum of Disapproval of Bill Repealing the Admissions Tax on Motion Picture Performances.

August 06, 1953

I AM WITHHOLDING my approval of H.R. 157, entitled, "To provide that the tax on admissions shall not apply to moving picture admissions."

My reasons for taking this position are that we cannot afford the loss of revenue involved and that it is unfair to single out one industry for relief at this time.

In my message to the Congress on May twentieth, I said: "Tax receipts will apparently fall considerably short of our necessary expenditures during the next fiscal year. In view of this fact, I have come to the conclusion that no reductions in tax rates should become effective during this calendar year." In accordance with this policy, the Treasury Department advised the Chairmen of the House Committee on Ways and Means and the Senate Committee on Finance of its opposition to this bill.

Because of the need for revenue I recommended an extension of the excess profits tax for six months and the extension has now been made. Tax relief for one industry now would be inconsistent with that action.

It is estimated that the repeal of the admissions tax on motion picture performances, which has been on the books at the present rate since April 1, 1944, would result in a gross loss of revenue of $200 million. After allowing for a resulting increase in corporation income taxes, the net loss is estimated to be between $100 million and $120 million a year.

It is not contended by the industry that the present scale of admission prices which reflects the 20 percent tax is responsible for the existing distress situation in the industry. Indeed, the industry apparently expects in many cases to maintain the present price to consumers even though the tax is repealed.

There is distress in large but not all segments of the industry. The basic causes of the industry's distress, however, arise from new forms of competition.

A strong case can also be made for tax relief in other industries which are subject to high excise taxes, including other forms of entertainment subject to the admission tax. If relief is to be given to motion picture theaters at this time it would not be fair to refuse relief to these other industries. If widespread relief were given, however, the loss in revenue would be very large.

As I said in my message of May twentieth, "the wide variety of existing excise rates makes little economic sense and leads to improper discrimination between industries and among consumers. Specific proposals for a modified system of excise taxation will be included in the recommendations for tax revision that will be submitted to the Congress next January."

The Treasury analysis has already progressed to the point where I can say that I will include a recommendation for a reduction in the admissions tax in my proposals for a modified system of excise taxation. Action could be taken by the Congress early in 1954 and relief could be given at that time.

It is for these reasons that I cannot give my approval to the repeal of the tax on admissions to motion-picture performances. The country cannot afford a loss of revenue at this time. Furthermore, it would not be fair and would be discriminatory to give relief under a single excise tax and then only to one of the industries subject to that tax.


Dwight D. Eisenhower, Memorandum of Disapproval of Bill Repealing the Admissions Tax on Motion Picture Performances. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/231878

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