Jaffe Skeptical of ‘Runaway Prod’n’ Tax-Credit Program

Count veteran TV movie producer Michael Jaffe among the skeptics as to whether California’s recently adopted tax-credit program — designed to help thwart runaway production — is going to yield any appreciable benefits.

Jaffe, a partner in Jaffe-Braunstein Films, recently wrote the following letter to the Santa Barbara News Press. (Click here for an earlier column of mine detailing some of the tax-incentive provisions, which commit up to $500 million to support local production over the next five years.)

Jaffe’s take is that the program is too little, too late, and won’t be enough to attract independent producers, thus becoming a corporate give-back to the major studios. He might well be right, but given the pleas from local below-the-line workers and supporting actors for something to keep production at home, it’s difficult for me to damn the if nothing else well-intentioned effort before giving it a chance. As even Jaffe concedes, “only time will tell.”

Anyway, here’s his position:

I have produced over 120 movies for television and started service companies that produced another 30-40 in Canada. I am one of the first to “runaway” from Hollywood. The AP article about California Tax Incentives for film production is misleading.

First, it fails to mention that numerous other states (Michigan, Connecticut, Georgia, Louisiana, and Iowa, just to name a few) have incentives that are markedly larger than California’s. No contest there.

Secondly, it fails to mention that the innate cost of doing business in the United States for lower cost productions where every dollar counts is simply much greater than in Canada. A recent example from my own professional life. We budgeted a film in Michigan. $4.7 mil.  Michigan’s tax incentive was a bout $1.5 million. Net to our company, $3.2 mil. Cost of the same film in Canada? 2.7 mil., without taking advantage of another $400k in tax incentives in Canada! Bottom line: Same film costs $900k. less in Canada than in the United States!

Thirdly, given number two above, how would California ever compete? It is more innately expensive than anywhere except New York and it gives smaller tax breaks.

So, if the stated goal of the California incentives is to create jobs in California then it is hopelessly behind a giant 8 ball. Thus the question is: who will get these incentives? And the only producers left to apply for them are people who already shoot here anyway – largely the major studios. The Film Commission says they have placed controls in the system to prevent this, but only time will tell. If there are no legitimate applicants for the credit, what will they do with the 100’s of millions of dollars the legislature has allocated? At this point anyway, one thing I doubt they will do is create any NEW jobs.

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