Five years of lobbying by entertainment unions, independent producers and industry vendors paid off on Oct. 22 with the signing of a comprehensive tax cut that includes a federal remedy to help deter runaway production. "With the new incentives provided in this legislation, uniquely American stories can now be more easily shot in the American towns, cities and rural areas where they are set,” said Directors Guild of America president Michael Apted. “Film and television productions, and the thousands of jobs and millions of dollars in revenue they provide, have one more solid reason to stay in America." The new law offers $136 billion in tax relief to various business interests. The provision that is most important to the entertainment industry provides a tax credit for films and TV shows made in the United States with budgets less than $15 million. Productions can qualify for the credit with budgets of up to $20 million if shooting take place in locations designated as "distressed." A coalition of labor unions – including IATSE, DGA, WGA, SAG and AFTRA – joined film commissions and small business owners in the push for the tax break – lobbying efforts in D.C. to educate lawmakers about the thousands of lost jobs and billions in lost revenue resulting from runaway production have been constant during the last five years. The question now is: will the new law translate into jobs for crew members? Many industry insiders believe that the law is a solid first step toward keeping production in the United States. Independent producers and tax analysts are filled with optimism about how the bill will impact the ability of small firms to do business. “This is going to jumpstart U.S. production in an enormous way,” said Schuyler Moore, an entertainment industry tax law expert. “There’s nothing like it in the entire U.S. tax code. It’s astounding.” “This is a system that is analogous to a leaseback that will be able to contribute 10-12 percent of a film’s budget,” said Jeffrey Levy Hinte of Antidote Films. Hinte suggested that the short-term advantages will be hard to gauge, but that the long-term potential of the system could spur independent filmmakers to shoot in the United States. “Overall, it’s good,” said Tim Williams, the head of production at GreeneStreet Films. “The trick now is for smaller companies to utilize it.” One element of the law that favors the studios is a provision that codifies the income forecast method of accounting - which offers studios a favorable depreciation schedule when they write off participations and residuals. It also classifies moviemaking as a "manufacturing process," thus allowing studios to get the same favorable tax rate as steel mills and chemical plants. Major studios were denied in their bid to obtain a special tax break to allow them to count each movie, DVD and videotape as a separate line-of-business – providing an estimated savings of $1-$5 billion over a decade. "In general terms, the producers I've talked to think it's a really good thing," said IFP/New York executive director Michelle Byrd. "This might interest people who have not invested in films to do so. Anything that provides a new opportunity for such people to invest is a plus. It will be interesting if this could potentially expand a niche for them."
For More General Industry News, Click Here 10-25 |
JOBS
Bill Becomes Law, Paves Way for Federal Runaway Remedy