Event includes review of the Jobs Creation Act
Independent producers at the American Film Market received an upbeat outlook on the growing use of incentives to keep production in the U.S., particularly in light of recent federal tax incentive legislation.
“Congress recognized the importance of keeping these jobs,” DGA lobbyist John Porter told an overflow crowd of 150 at Monday’s seminar. “Every industrialized nation in the world has some sort of tax incentive to lure film production.”
The event included a review of the details of the Jobs Creation Act that apply to showbiz, which allows indies to write off a movie in a single year if it has a budget of $1 million-$15 million and 75% of that budget is spent in the U.S. The limit increases to $20 million if the movie is made in a low-income area of the U.S.
The showbiz tax break is a tiny piece of a massive $136 billion corporate tax bill intended to end a bitter trade war with Europe. And Ernst & Young partner Jeff Tolin stressed that the legislation isn’t a credit or rebate but an accelerated tax deduction phased in at 3% in 2005 and 2006, 6% in 2007 through 2009 and 9% thereafter.
Event also featured updates on state incentive programs for New Mexico, New York, Louisiana and Illinois, where a 25% tax credit went into effect this year. Illinois film office director Brenda Sexton told the audience that the incentive had lured a dozen productions and an estimated 12,000 showbiz-related jobs to the state — which enacted the legislation after “Chicago” was shot in Toronto.
Mark Smith, Louisiana’s director of the Governor’s Office of Film & Television Development, said that the state’s tax credits of between 10% and 20% had helped lure “Glory Road,” “Ray,” “Because of Winn Dixie” and five movies of the week to his state.
The success of the program, modeled after Canada’s, has resulted in state legislators making the tax credits permanent.
Pat Kaufman, director of New York’s Office for Motion Picture and Television Development, said there had been strong response to the state’s 10% tax credit for productions where 75% of the sound stage work was performed in New York. “It’s becoming increasingly rare for location decisions to be based on artistic considerations,” she added.
The DGA programmed the seminar. Moderator Dennis Bishop, a DGA member who’s on a runaway production committee of the California Film Commission, said a number of other states were also bringing in incentives. He added that the commission hoped to take advantage of Gov. Arnold Schwarzenegger’s support to enact anti-runaway legislation in California.
“The problem in California is that it’s difficult to prove that it’s not corporate welfare,” he added.