A bipartisan group of lawmakers unveiled federal legislation Thursday that would create a 20%-30% U.S. film incentive, in a bid to secure American dominance in entertainment production. The incentive would stack on top of state tax credits, combining to create the world’s most generous subsidies for film and TV. A historic slump in production has cost more than 50,000 jobs in Los Angeles alone over the last four years, prompting calls to do something to counter generous subsidies in the U.K., Canada, and 63 other countries.
President Trump came on board last month, calling on Congress to “immediately” craft legislation to save the industry. The 20% base credit would apply to all labor costs, both below-the-line and above-the-line. A series of “uplifts” would grant 5% bonuses for filming in rural areas or for independent productions, bringing the potential maximum to 30% of labor costs.
Los Angeles County would also qualify for a 5% bonus for the next five years as a federal disaster area. Nathaniel Moran, R-Texas, one of the bill’s sponsors. Adam Schiff, D-Calif., said he has been pushing for years for a federal incentive to stop the exodus of jobs overseas.
Several states already offer tax incentives of 30% or more. California is in the midst of a debate over whether to increase its state incentive, which is already set at 35%-45%, but is capped at $750 million per year. Manitoba currently offers one of the world’s most generous incentives, with a credit on below-the-line labor that can reach as high as 65%.
Lynne Skromeda, Manitoba’s film commissioner, said that it’s unclear how much of an impact a U.S. credit would have on production in the province. But Manitoba is the kind of place where you make it through no matter what.” Skromeda said that some local producers had done back-of-the-envelope math, and figured that Manitoba would still come out on top due to the currency exchange rate. Chianese, of Entertainment Partners, noted that it’s also unclear how other countries might respond to a U.S. film incentive.
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