Lawmakers Unveil 20%-30% U.S. Film Incentive in Bid to Restore Hollywood Production

As seen in Variety.

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.

“If it passes and it stacks clean, shooting in Georgia or California or New York is the best deal on the planet,” said Joe Chianese, senior vice president for incentives at Entertainment Partners. “Nothing overseas comes close.”

The legislation is the product of a two-year effort from Hollywood unions and the Motion Picture Association, which lobbies on behalf of the major studios. 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.

“If we want to keep American storytelling in America, we have to level the playing field, and that’s exactly what this bill does,” said Rep. Nathaniel Moran, R-Texas, one of the bill’s sponsors. “This isn’t about subsidizing Hollywood — it’s about supporting the American worker, one story and one production at a time.”

The MPA released a study last week that found that a federal incentive would double the nation’s $20 billion film and TV production industry by 2032, and create some 143,500 jobs.

“We cannot stand by as more and more American film production moves overseas, taking jobs, investment, and an important source of American cultural influence with it,” said Sen. Tim Scott, R-S.C. “This legislation will create jobs in communities across America, support local economies, and help ensure that the next generation of iconic American films is made right here in America.”

Sen. Adam Schiff, D-Calif., said he has been pushing for years for a federal incentive to stop the exodus of jobs overseas.

“Now, we have the best opportunity in decades to get it done,” he said.

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.

“The devil is in the details,” she said. “I think it definitely could have an impact. 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.

“There’s going to be some response,” he said. “You have to imagine that the UK and Canada are going to do what they can to protect the industry they have.”