Legislation allocates $250 mil over five years
HOLLYWOOD — Backers of anti-runaway production legislation have cleared a key hurdle for their tax credit bill aimed at productions budgeted under $10 million.
The measure, introduced two weeks ago as the U.S. Independent Film and TV Production Incentive Act of 2003, has been included in the Foreign Sales Corporation/Extra Territorial Income bill approved Wednesday by the Senate Finance Committee. The FSC/ETI bill allocates $250 million over a period of five years to the runaway legislation.
“This legislation will create ripple effects on local communities by bringing feature film and television production projects back to cities and towns across the United States,” said Sen. Blanche Lincoln (D-Ark.), who authored the runaway bill. “I’m pleased this legislation has cleared this important hurdle, and I plan to work with my colleagues on both sides of the aisle to keep attention focused on this important economic tool.”
The FSC/ETI bill would replace a tax break for American exporters — ruled an unfair subsidy by the World Trade Organization — with a tax cut. Its most controversial provision would also allow companies with profits invested overseas a four-month amnesty period to return the money to the United States at a tax rate of 5.25% rather than 35%, which is expected to bring a flood of money back to the U.S.
Lincoln carried a similar anti-runaway measure during the 2001-02 session, but the bill and a companion measure in the House never found traction.
Lincoln’s legislation provides a two-tiered wage tax credit (equal to 25% of the first $25,000 of wages and 35% of such costs if incurred in a “low-income community”) for production of films, television or cable programming, miniseries, episodic TV, pilots or telepics substantially produced in the U.S.
Earlier this year, Reps. David Dreier (R-Calif.) and Howard Berman (D-Calif.) introduced HR 715, which mirrors Lincoln’s bill. Backers were unable to attach the provisions to the $350 billion economic stimulus package approved in the spring.
The anti-runaway bills have been introduced amid strong support from the guilds and other Hollywood orgs. The legislation is viewed by proponents as the most effective way for Hollywood to compete with foreign locales that offer the twin inducements of lower costs and government-funded incentives.