Highs, Lows, backtracks, retracts, sidesteps, referrals… no, not a day in the life of a C-list movie star, but State Film Tax Credits. There has been a lot of news of late about these incentives, with each US state varying wildly with new schemes, tweaks to initial offerings, extensions and deadlines. Do movie jobs depend on them? Do they cost the taxpayer in the long run?

It was recently announced by the Los Angeles Economic Development Corp. that the tax credits in California were responsible for pumping $3.8 billion into the local economy since it’s launch in 2009 to slow runaway production. It also helped create over 20,000 film industry jobs. Perfect timing, as the California State Assembly has just approved a bill to extend these tax incentives for an additional five years, and if passed, another $100 million in credits will be handed out after July 1. The report by the LAEDC concluded that “for each tax dollar allocated the local and state governments get back at least $1.13 in tax revenue, while the total GDP in the state will increase by $8.48“.

The problem for Hollywood specifically is that California jobs aren’t guaranteed – CA is not the only state offering these incentives, and others offer a larger budget, and less restrictions for projects to qualify.

Kansas Film Production

The Kansas Film Production Tax Credit is back after a two year hiatus, and offers a credit on “30% of the direct production expenditures made in Kansas that are directly attributable to the production of a film in Kansas“.

New York Film Production

New York State Film Production Tax Credit Program has been extended and expanded, offering a whopping $420 million per year to production companies. Again, this incentive will be running until 2014, and offers 30% tax credit on qualified costs incurred in New York State.

Utah Film Production

“Gov. Gary Herbert signed into law HB99, bumping Utah’s motion-picture incentive from a 20 percent tax rebate to 25 percent“, reports The Salt Lake Tribune.

Wyoming Film Production

After lowing their minimum spend two years ago, Wyoming now has a five-year extension of the Film Industry Financial Incentive program, which, as Wyoming Film Office blog states, “will continue the cash rebate incentives for production companies of up to 15 percent on dollars spent in Wyoming during a film shoot“.

Virginia Film Production

“Gov. Bob McDonnell signed legislation that establishes a film tax credit program in Virginia” tells Hampton Roads.com. With a minimum spend of $250,000, production companies can now seek tax credits from the state.

Leaving Los Angeles?

On the downside…

Got through the good news? The LAEDC report followed hot on the heels of a more damning review. The Tax Foundation claimed a couple of weeks back that “film tax credits fail to live up to their promises to encourage economic growth“. As a result, some states suspended or rejected any extensions of their incentive schemes, whilst many more reeled back the amount of credit offered or are questioning any continuation of their current system.

Connecticut Film Production

The new Connecticut budget places “restrictions on the film and television tax credit program” which “may make the state less appealing to Hollywood” claims the CT Post. Specifically, worries are regarding the reducing of ability to transfer these credits to other Connecticut based companies, and limiting the way that insurance companies can use the credits when bought.

Michigan Film Production

Michigan, which has offered the most bountiful credits to film companies at up to 42% of production related expenses, is in the middle of plans to slash those levels drastically. The overall budget for film credits will likely be reduced from $100 million to $25 million, although, as WSJ points out, Gov. Rick Snyder would have liked to put an end to the idea completely.

Washington Film Production

After two years of operation, the Washington Film Works will be closed as state legislators decide to not offer any kind of initiative moving forward. The News Tribune reported that local representatives had been “questioning the worth of film incentives in particular”.

New Jersey Film Production

Earlier this year, New Jersey announced that they were suspending their Film Tax Credit program, with much deliberating from CSINJ along the way.

Arkansas, Idaho and Maine all appropriated no funds for their programs this year, and Wisconsin allocated just $500,000 after deciding that any movie productions would equal a net loss for the state.

The pros and cons are often being heavily debated. Check out this transcript from Boston’s WBUR, between Peter Enrich, “a law professor at Northeastern University who opposes the state’s film tax credit program”, and Vinca Jarrett, “founder of the Boston firm FilmPro Finance, which helps movie-makers get financial backing”.

Ultimately, the bottom line for studios is what it comes down to when dictating job locations… if they can make the same movie for less money in a different US state, then why wouldn’t they? Without various credits, will we see these projects move to Vancouver or Rio de Janerio?

Hopefully this post shares some new information with you, and here at Media Match we’d love to hear if you have any views on or experience with the film tax credits system in your state.


by Lee Jarvis.

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This post is intended to offer general ideas to independent production professionals, rather than legal advice. Please consult a tax specialist with your specific legal questions.

April 15th is fast approaching, which for Editors, Cam Ops, PAs, Producers and every other freelance TV and Film industry worker across the country, is a fearful date: something about all that tax jargon just isn’t as appealing as cutting a new showreel, or checking the latest local feature. Well, Media Match thought we should share a few last minute helpful tips, ideas, and reminders on deductibles, seeing as the independent media industry worker can often take deductions that are normally not available to most people. Oh, and there’s additional good news this year: April 15th coincides with a District of Columbia holiday, and so all 2010 tax payments are instead due on Monday, April 18.

Common tax deductibles for freelancers and professionals in the TV and Film industry

- Equipment purchases, rental, repair and maintenance.
- Subscriptions and purchases of Variety / The Hollywood Reporter and other trade publications.
- Being a service that you use to find employment, your subscription to Media Match is tax deductible.
- Rehearsal hall, studio, office or storage rental.
- Acting / Singing Lessons.
- Stage clothes/makeup (but you can’t use the clothes for everyday use.)
- Memberships in professional associations and the unions.
- Website and email database setup and maintenance costs.
- Production of physical promotional materials; DVDs, photos, newsletters.
- Whilst away from home, you can deduct 100% of travel and accommodation…
- And 50% of business meal expenses – while shooting on location, all of your meals are business meals.
- Report payments to other freelancers. Legal fees are also deductible. (Note: You must send a 1099 to any independent contractor, such as the sound assistant you hire for a music video shoot, to whom you pay $600 or more.)

Finally, a little soundtrack to give you the motivational kick you may need Happy filing!

The Media Match Team.

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I’ve seen more and more articles recently decrying “runaway film production” – film and TV shows leaving our city and our state, and heading toward more tax-friendly environs.  I have heard for years about Canada, for instance, offering a way out to productions seeking to trim costs… their streets and their locations serve well as a substitute for American locales, but at lower prices (for both location use as well as crews).  But I didn’t know why, in the past year, the issue had ballooned.  So I decided to do some research, to discover what moves the “competition” had made, and what (if anything) our state had done in the past few years to halt this trend.

One article I found dated back to November of 2006.  It talked about the need to retain film production in Los Angeles, and was written by our own mayor, Antonio R. Villaraigosa.  He was writing the piece in response to an editorial in the LA Times, which criticized closing the 105 in order to film a scene for “Live Free or Die Hard”; he stated in simple yet concise tones the need for our legislators to do all they can to keep these productions from heading elsewhere.  He writes: “Today, only 11% of all feature films are being made in California, and we cannot afford to cede this integral industry to other cities, especially as competition grows more fierce.”  He then goes on to cite that competition, pointing out that “14 states [have] passed new tax incentives or improved existing incentives for film productions,” and the “troubling, long-term implications to that trend.”  Finally, he rounds out his opinion piece by mentioning his support AB 777, a bill which could provide tax incentives for productions to stay in California. 

Sounds good to me.  So, this being a year-and-a-half ago, I did some research to find out what happened to “Assembly Bill 777 – Motion Picture Production Tax Incentives for California”.  While some criticism was levied against it with respect to its effectiveness, or the cost to California taxpayers, overall the bill seemed to be a good start.  The only problem is, this bill seems to have disappeared.  The most recent reference I could find to AB 777 was dated February of 2007, and talked about cruelty to elephants.  Obviously, the bill had had a makeover.

Searching for similar bills led me to an article from June of 2007.  One line in particular caught my eye, because of its familiarity:  “We will not sit idly by and watch this homegrown industry disappear because other states are being more aggressive.” This from Majority Leader Karen Bass, of Los Angeles.  Very similar to Villaraigosa’s stance, and yet again, I can find no follow-up article discussing a bill being passed.  It seems this push, too, had stalled.

I did, however, find an article from April of this year, which discusses the New York State legislature’s plan to triple their film and TV tax credits for productions within its borders.  The article goes on to say how “New York City [in particular] also offers a 5% credit, so city shoots can reap a total of 35%.”  And what was the reasoning for these increased credits?  Was the legislature responding to some move made by California’s lawmakers, a sort of tit-for-tat?  Was it trying to break the west coast’s hold on film and TV production?  No, these incentives were done “in a bid to regain an edge over [New York’s] credit-happy neighbors Connecticut, New Jersey and Massachusetts.”  That’s right – not to counter any moves that California or Hollywood had made, but to beat the moves made by other states.

Which finally led me to this article, from May 2008, in which Governor Arnold Schwarzenegger calls for legislative action, saying “California must increase tax incentives to movie and television studios as a way to keep them from moving their productions out of state.”  These comments came days after ABC Studios said it was moving production of ”Ugly Betty” from Los Angeles to New York – meaning the siphoning has extended to include not just individual shoots, but entire productions as well.  The article adds that Schwarzenegger has been pushing for such legislation for four years, but so far has found no success.

That is our loss – and this loss extends beyond the revenue generated by the productions themselves.  It seems simple to say, but keeping these shoots in Los Angeles and California in general can only have a positive impact, especially on tourism.  Because what else are we primarily known for, if not being the entertainment capital of the world?  Take away our film and TV shoots, and you take a major part of our identity.

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