HOLLYWOOD RALLIES AROUND TAX BILL TO STEM ‘RUNAWAY PRODUCTION’

Domestic film and TV productions would be eligible for tax credits under bill introduced on Tues. that seeks to stem “runaway production,” flight of projects from U.S. to foreign locations. S-1278 by Sen. Lincoln (D-Ark.) would level playing field between U.S. and nations that entice companies with their own tax and other incentives. Following bill’s introduction, Hollywood producers and actors met in Washington to discuss impact on industry and explore possible govt. measures.

S-1728, which is cosponsored by Sens. Breaux (D-La.), Durbin (D-Ill.), Landrieu (D-La.) and Snowe (R-Me.), would provide 2- tiered tax credit for projects with total wage costs ranging from $20,000 to $10 million. Credit would be equal to 25% of first $25,000 in production wages and salaries. Projects in low income areas would be eligible for 35% tax credit. Tax relief under bill would apply to productions of films, TV or cable programming, miniseries, episodic TV, pilots or TV “movies of the week” that are “substantially produced” in U.S. Films and other media containing “sexually explicit conduct” wouldn’t be eligible.

Production projects have “ripple effects” that bring benefits to businesses in areas that service such projects, including restaurants, hotels, caterers and equipment rental companies, Lincoln said. Foreign govts. have encouraged migration of U.S. production, resulting in “massive loss for the U.S. economy,” she said: “Certain countries, such as Australia, Canada, New Zealand, and several European countries, have been particularly successful in luring film projects to their towns and cities through offers of large tax subsidies… These governments understand that the benefits of hosting such productions not only flow to the film and television industry.”

Panelists at Creative Coalition event at National Press Club Tues. night, including Rep. Weller (R-Ill.) and Sen. Edwards (D- N.C.), pledged support for bill. Congress can work to reduce production costs, and “tax credit is one of those solutions,” Weller said: “It’s not just a Hollywood issue. It’s a national issue.” Edwards said businesses in his home state of N.C., which is 3rd largest host of production projects behind Cal. and N.Y., have suffered from runaway production. However, when asked if he would push to hold hearings on matter, he was noncommittal: “It’s certainly worth thinking about.”

Producer Tony Goldwyn said that Dept. of Commerce report released earlier this year estimated that U.S. sustains about $15 billion in annual losses from runaway production. This includes “trickle down” losses by small businesses as well as tax losses by U.S. govt., he said: “In 5 years, our business will be an offshore industry.”