Production Incentives & Tax Credits: A Special Report

This VIP special report tackles the history, application of and turbulent discourse over one of the most consistent financial models grinding the gears of film and television: production incentives. Despite playing a huge role in the completion of tentpole films that dominate the box office, many viewers and even industry insiders often ignore the prevalence of tax credits and the massive role they play.

State government incentives not only dictate where and how often projects are shot, along with the employment clusters that keep below-the-line workers planting roots in new cities over and over again by proxy, but also the creative direction taken by filmmakers due to the major transfer of public money into corporate pockets via these incentives.

These tax incentives have long been embroiled in the push-and-pull of our bipartisan political system. Republican lawmakers have at times wiped out generous incentives established by Democratic predecessors, as was the case in Michigan when their popular 42% tax credit was nixed by Republican Governor Rick Snyder after succeeding Jennifer Granholm in 2011; likewise, the opposite has been true in states like New Jersey, where a previous production incentive was restored upon Governor Chris Christie leaving office in 2018.

But in recent years, it hasn’t only been Republicans critical of the utilization of taxpayer money for Hollywood. “Sex and the City” star Cynthia Nixon made New York’s tax credit program an item of concern when challenging Governor Andrew Cuomo’s seat in 2018, and the same issue was brought up in a more serious manner in 2019 when U.S. Representative Alexandria Ocasio-Cortez protested Amazon’s pick of Queens for an east coast headquarters, and successfully prevented them from allotting $3 billion worth of taxes (Amazon later signed a deal to lease space for a smaller office in Manhattan, on their own dime).

Sometimes money isn’t the only issue. A wave of anti-abortion legislation sweeping red states in 2019 saw Georgia in its crosshairs, causing a plethora of Hollywood companies and players to propose their own boycott of the state should the new measures be enacted into law. With the state handing out over $3.5 billion in tax credits since 2009, resulting in a significant number of Marvel productions and every season of “The Walking Dead” shooting there, this would have been a hefty loss for the industry, but the the bill was struck down by a federal judge. Still, it was proof that production hubs like Atlanta cannot be taken for granted.

As the welfare of corporations fronting the bill for Hollywood becomes increasingly tied to political moments, can studios continue to successfully defend tax credits as a net positive for state economies? Or is the criticism of this practice founded in hard truths, and will producers find themselves continually scrambling for new financial models to keep up with the demand for content?