Among many D.C. lobbyists, when the bet is on whether a piece of legislation will pass Congress or not, the rule of thumb always is to take the latter. Yet, a long-desired federal film and television tax incentive that’s suddenly coming to life with the recent backing of Donald Trump could prove the exception. Maybe.
Lawmakers on both sides of the aisle are drafting legislation, with current plans for a 20% incentive and an additional 5% to 10% for rural areas or spread across several states. A bill could be introduced this month, with some announcement on the status expected when Congress returns next week, and the details are not set in stone.
“This is the best opportunity now we’ve had to get this done in really decades,” Sen. Adam Schiff (D-CA) said on CNN this week. On Tuesday, Schiff complimented talks among the White House, House members and some of his fellow Senators, but cautioned a deal is not yet done. “Negotiations are ongoing,” Schiff, who Trump has long attacked personally and politically, told Deadline.
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So far, the anticipated multibillion-dollar federal incentive also has the advantage of backing by some members of the House Ways & Means Committee, which controls the purse strings, and that support is bipartisan. Among those said to be working on legislation are two members — Rep. Nathaniel Moran (R-TX) and Rep. Linda Sanchez (D-CA) — each from a state that has a lot of production in its past, present and hopefully future.
That said, even though proponents see the best prospects in years for passage of something, there still is a long way to go despite the backing of a fickle POTUS and the other good intentions.
Here are some of the hurdles ahead:
With so few days left in the legislative session before the midterms, there just isn’t time left to pass legislation before then, especially a bill that is still in the works. Advocates including studio representatives and union officials are expected to up their PR campaign in the coming weeks, particularly if there is a concrete proposal on the table.
That leaves the question of when. The lame-duck session will likely focus on whether an agreement can be reached on an overall bill to fund the government, with an expiration of December 11. If the past is any guide, it’s much more likely that the bill would be attached to some end-of-year funding measure than as stand-alone legislation.
While a number of Republicans and Democrats are said to be on board with the legislation now, the question is what the sentiment will feel like after November 3. Would polarization only harden after a Democratic rout? What’s the appetite for bipartisan legislation if the election results are contested? That said, there is a strong desire to pass incentives legislation this year, rather than restart the process in the next Congress, when priorities could very well shift.
Supporters of state tax incentives long have held that the benefits greatly outweigh the costs, but there will be plenty of scrutiny on the bottom line. That typically comes via an analysis from the Congressional Budget Office, so expect to see a lobbying push to outline how the incentive will save or restore jobs.
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A key factor will be whether the ultimate incentive figure is large enough to persuade producers to forgo the UK or Australia or even Canada and locate in the United States. One of the big criticisms of California’s early incentive program was that it was too little, too late, especially with states like New York and Georgia offering much heftier sums of money. Proponents will have to make the case that the incentive will have to be large enough to be meaningful.
Indications are that the bulk of what is being discussed behind closed doors is based in large part on the format and execution of California’s annual program, now at $750 million. A goal of any federal incentive is to snag relocating productions, series or films first made outside the country or content that had already been assured foreign credits but haven’t yet started production.
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With a few words from his pal Jon Voight, the president threw his support behind an incentive earlier this month, undoubtedly generating some momentum for getting something passed. But he also could change his mind. It’s not out of the realm of possibility that something will trigger him — particularly entertainment-related — that would cause him to shift course.
RELATED Trump Backs Federal Film & TV Tax Incentive: “Hollywood Is A Complete & Total Disaster!”
Among proponents, there’s also a push to highlight support among Republicans, in part to emphasize that the legislation would not just benefit California and New York. That could counterweight the visibility of one of the champions of a federal incentive, California’s junior senator Schiff, one of the president’s biggest foes. He recently told CNN: “Just because it’s this president, if it’s a good idea, I’m not going to oppose it. In fact, I fully support this.”
Asked by Elex Michaelson whether his relationship with the president would make passage more difficult, Schiff said, Schiff noted that Trump has “mentioned bipartisan support, mentioned my support for it, so he didn’t deterred at all by it. He thought that that was a positive.”
The entertainment industry is an easy punching bag, especially on the right, and it’s not hard to see the incentive being cast as a bailout to an elite industry dominated by the left. The Wall Street Journal editorial page quickly weighed in last week, with the headline, “Handouts for Hollywood — Really? Adam Schiff and Donald Trump unite to subsidize the rich and famous.”
“A production tax credit would provide a short-term stimulus for one industry, which primarily supports Democrats,” the Journal‘s editorial team wrote.
RELATED: Illinois Boosts State Film Tax Credit For Environmentally Sustainable Productions
That’s why the support of lawmakers in red states such as Texas, Louisiana and Tennessee might be critical, even with Trump’s backing, as well as the emphasis on legislation as a jobs bill, benefiting an aspect of the manufacturing sector and across different parts of the country.
The Motion Picture Association knows the territory well, as it has sought to make issues like piracy and copyright relevant to the average public whose impressions of the entertainment industry tend toward red carpets and awards show glamour. “The use of the word ‘Hollywood’ has got to stop,” says one booster.
