Tax credits likely to be introduced

Backers of tax incentives to slow runaway production are planning to reintroduce such legislation during the current congressional session.

Reps. Xavier Becerra and Howard Berman, both Los Angeles-based Democrats, made the pledge Friday in the wake of release of a Commerce Dept. report confirming that runaway production has accelerated and is particularly hurting below-the-line employees.

Although details have yet to be worked out, legislation would most likely follow along lines of previous federal bills: a 20% income tax credit for each worker’s wages (up to $20,000) on productions with budgets up to $10 million along with a research and development tax credit for purchases of digital post-production equipment. Such initiatives are designed to blunt foreign efforts to lure U.S. producers through tax breaks and far lower wages.

Berman noted that the report supports the conclusions reached in the 1999 Monitor Co. study, showing that runaway production was taking away 20,000 U.S. jobs and $10 billion in annual economic activity.

“This is a substantive report that documents the problems we face in keeping our entertainment industry jobs here in America,” Berman said. “The below-the-line employees are really hurting in Los Angeles and other U.S. cities.”

Becerra said the Commerce study will provide momentum for the House’s Entertainment Task Force to push the tax incentive forward. That group includes Reps. Gary Condit (D-Calif.), Mark Foley (R-Fla.), Robert Matsui (D-Calif.) and Jerry Weller (R-Ill.).

“The new study is the slap in the face that we needed,” Becerra said.

The Commerce report contends that runaway production is preventing the U.S. from receiving the full benefits of some of the most popular types of TV programming.

“At a time when worldwide film and television production is booming, production of films in the United States has leveled off,” the report said. “All of our research indicates that the rates of growth in many foreign countries, particularly English-speaking countries, may well have considerably outstripped the growth rates in the United States for the past decade. This is especially true in movies-of-the-week and miniseries productions made for TV, the most dynamic part of the film production industry.”

The report also warned that conditions may worsen. “Some fear that there is a danger that these recent trends could lead to a downward spiral for certain segments of the industry in which more and more U.S. film production moves overseas, taking with it thousands of jobs, infrastructure, technical and artistic expertise, and U.S.-developed technology,” it said.

The Commerce Dept. cited economic studies showing that the entertainment production industry employs 270,000 Americans. The authors of the report also argue that the domestic “below the line” companies and workers are “particularly vulnerable” to declines in demand for their services.

“Some of these workers are highly skilled artisans, others are manual laborers,” the report said. “But they all have one thing in common: They cannot move to Canada or Australia at the drop of a hat to perform jobs that are as routine to film production as those of skilled workers are to the production of steel or automobiles.”

The Directors Guild of America, which commissioned the Monitor study along with the Screen Actors Guild, said it welcomed the new study. “The DGA looks forward to working on solutions to this problem with the 107th Congress and the Bush Administration,” DGA prexy Jack Shea said.

Canadian officials have long contended that the Monitor report over-estimated the economic impact of runaway production.

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