UPDATED: A bipartisan group of lawmakers officially introduced legislation on Thursday to create a 20% federal film and TV incentive, a first-of-its-kind tax credit designed to lure production back to the United States.
The legislation, the Motion Picture, Television, and Entertainment Revitalization Act, would apply to compensation paid directly related to a production, exclusing residuals. It also would create additional incentive “uplifts” of 5% for productions in opportunity zones or federally declared rural disaster areas. Other sweeteners are being proposed for productions across 10 or more states, as well as for producers of independent productions and for those who increase their domestic production “relative to a historical foreign base amount.”
Read the proposed federal film and TV incentive bill.
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Even though industry boosters have called for such an incentive for years, the prospects for the proposal gained new momentum late last month when President Donald Trump endorsed such legislation.
The co-sponsors of the incentive include Sen. Tim Scott (R-SC) and Sen. Adam Schiff (D-CA) in the Senate and Rep. Linda Sanchez (D-CA), Rep. Brian Jack (R-GA), Rep. Nathaniel Moran (R-TX) and Rep. Laura Friedman (D-CA) in the House. Other backers include Rep. Judy Chu (D-CA), Rep. David Kustoff (R-TN), Rep. Mike Carey (R-OH) and Rep. Tom Suozzi (D-NY).
The productions eligible for the credit include film and TV productions where the total cost exceeds $1 million and where 75% of the production is in the United States. There also are provisions for post-production and visual effects. Excluded are news, live sports, talk shows, daytime dramas, social media content, advertising and corporate videos.
The credits also can be transferred to another taxpayer, a key point for producers and studios. The authors also say that the credits can supplement state incentives, something that Schiff has said will help U.S. incentives compete with those in other countries.
There are still challenges ahead, even with the backing of the president and members of both parties. The House is already in recess through the midterms, and the Senate is about to adjourn soon. The hope now is to attempt to pass legislation during the lame duck session at the end of the year, perhaps by attaching it to a major funding bill, Schiff said in a call with reporters.
“So much of the film industry, in particular, have moved overseas because the United States has simply not been willing or able to match the tax incentives,” Schiff said. “States have tried, and California has certainly tried, but can’t on its own make up for the very substantial incentives overseas.”
The bill has created some unusual alliances. Schiff said that he worked with the White House on the legislation, and credited Trump with generating the momentum for the long-in-the-works proposal for such an incentive. He also said that he worked with Jon Voight, who is serving as Trump’s “ambassador to Hollywood,” and Spencer Pratt, the reality star who ran for Los Angeles mayor earlier this year.
The Wall Street Journal editorial page already has weighed in against the idea of film incentives, deeming them “handouts” to Hollywood. But backers of the tax credits are trying to highlight broad support across the industry and across party lines, while emphasizing the benefits to below-the-line crew members.
Friedman said on the press call, “I just want to remind people that the U.S. gives incentives to a variety of industries — semiconductor chips, the energy sector, pharmaceutical research and development. When we decide that an industry is important, we are the United States, and it’s up to us to determine what industries we’re going to support and what’s going to be in our country and not be in our country. This is a signature industry for the United States, and certainly for us in Los Angeles.”
MPA Chairman and CEO Charles Rivkin said in a statement that the bill was “a true gamechanger for American creators, workers, and businesses — a federal incentive that supercharges production at home, fuels jobs and growth in local communities, and makes the United States a more competitive destination for the next generation of great film and television.”
Christopher Nolan, president of the Directors Guild of America, called the bill “the most significant legislative effort in a generation to promote domestic film and television production, and the hundreds of thousands of jobs it supports. This moment is the cumulation of years of work by the entertainment guilds and unions, in partnership with the MPA and lawmakers from both parties.”
Schiff said that he didn’t think that the dynamics for getting the bill passed will change much depending on who wins control of Congress in the midterm, but said, “I would be more concerned, frankly, with whoever is in the majority, this getting kicked to next year.” Sanchez had talked of striking while the iron is hot, he noted, and “the iron is very hot right now. We’re all very focused on this. The president is focused on this. I wouldn’t want to see that bleed into next year.”
