What Happened to Film Tax Incentives for Financing a Film Budget?
Film tax incentives have currently undergone a radical reversal affecting the film budget of numerous productions in the development, financing and prep stages. This drastic downgrade in the availability of film credits as a film finance component is unprecedented in it’s immediate impact on film financing.
Created to reverse years of runaway production to Canada and overseas locations, film tax incentives grew to become a basic part of the film budgeting and funding equation. The U.S. states found themselves in a bidding war resulting in raising the incentive benefit rate higher and higher in order to gain more local production expenditure spent on businesses in their state.
The bottom line is that the readily easy soft money is much more difficult to obtain as the competition for the reduced film tax incentive pool expands. Movie producers are leaving areas previously calling themselves “film friendly” with their programs and heading toward those states with a consistent and stable film tax incentive program.
States that have benefitted from these changes include:
Louisiana was best prepared to take up the production slack as their governor had provided the assurance to producers and studios by making the film tax incentive permanent.
California meanwhile implemented a film tax incentive of its own after years of pressure from the industry to do something about runaway production to the states offering the generous incentives as well as international locations offering their own film tax credit and co-production facilities. Studios, production companies and producers utilize the California incentives to enhance their production film budget costs and return these film and television programs to Hollywood.
While the benefit to the local economy has been heralded by all sides, as well as the creation of a local film industry in their regions, the political mood during the current economic crisis has railed against the film tax incentives support for a production’s film budget as taxpayer giveaways. Opponents fail to acknowledge the positive impact of film production to their locales, and proponents claim the expense to the treasuries of the states is a worthwhile investment in people, jobs and creating a green industry with high paying jobs.
The debate continues.