Embedded In The Fiscal Cliff Deal: Hollywood Gets A Big Tax Break

from the how-nice dept

Last month, we wrote about some of the more ridiculous subsidies that Hollywood studios get these days, in which approximately $1.5 billion in taxpayer money goes straight to Hollywood studios in the US (and even more internationally). While the reasoning given for most of these programs is that they create jobs, a thorough study of the various programs showed that almost never happens. Of course, most of those programs have been state subsidies. The federal government also has its own subsidies for Hollywood -- and they just got renewed in the fiscal cliff deal, despite being scheduled to expire.

It's one of the head scratchers that some noted would take people by surprise given all of the talk about the "fiscal cliff." Here's what it looks like:
Like many such things, this started out with good intentions, with the idea being to help small, independent films stay in the US. But that changed:
The original tax incentive applied to productions costing less than $15 million to make ($20 million in low-income areas). The 2008 extension applies to all films, up to a deduction of $15 million (or $20 million in low-income areas). The incentive is especially generous to television series; it applies to each TV episode.
Apparently, this sucker costs the American taxpayer about $150 million per year. As that link notes, "Disney's Gotta Eat." Yes, this was just one of many such "pork" efforts slipped into the fiscal cliff deal -- along with things like providing Goldman Sachs subsidies for its headquarters, special breaks for NASCAR, tax benefits for Puerto Rican Rum, and more -- so perhaps it's not that surprising. But, it's stories like this that explain why so few people trust Congress, and why they're fed up with "crony capitalism."

Filed Under: fiscal cliff, hollywood, movies, pork, subsidies, tax breaks

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  1. identicon
    Producers Guild Member, 4 Jan 2013 @ 11:27pm

    Section 181 creates jobs

    Wow. Calm down.

    If you knew anything about the nuts and bolts of film/TV production, you'd know that the $20MM ceiling disqualifies 80%+ of studio movies. Most of the big movies you see in the cinema are $100MM-$200MM or more. So section 181 benefits smaller independent movies that create jobs.

    If you know real, blue-collar entertainment workers (electricians, truck drivers, greensmen, carpenters) you know that the biggest loss of jobs has been to overseas production. Productions shoot in Canada, Bulgaria and other countries to cut costs and collect incentives.

    The tax deduction in section 181 only applies to projects shot at least 75% in the USA. This will bring jobs back to the USA, as well as the money that a production spends on local businesses -- which means even more jobs.

    The section 181 deduction provides tax incentive for investors to back films made in the US using American workers. It stimulates the economy and helps out a lot of middle-class workers who have lost work to foreign competition.

    This is a tax break that helps the little guy in the entertainment industry, not the corporate titan. It took a lot of effort to get this break which is tiny in comparison to other tax incentives given to the rich in other industries.

    Please don't ruin it for those who really need it.

    -Member, Producers Guild of America

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