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Lights, camera, action...incentives
Credits and Incentives talk with Deloitte
“Credits & Incentives talk with Deloitte,” is a monthly column by Kevin Potter of Deloitte Tax LLP, featured in the Journal of Multistate Taxation and Incentives, a Thomson Reuters publication. February’s issue of “Credits & Incentives talk with Deloitte,” provides some examples of available tax credits and incentives for film and television production in a number of state and local jurisdictions. While the incentive type (tax credits, exemptions, cash grants, locations at no cost, etc.) and size vary from jurisdiction to jurisdiction, they all share a similar goal, namely, to lure film or television production and drive economic growth.
- The impact of film and television tax credits & incentives on state economies
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The impact of film and television tax credits & incentives on state economies
The Motion Picture Association of America estimates that the U.S. film and television industry is directly responsible for creating or retaining 293,000 jobs and an estimated $46 billion in wages in 2013. It is further estimated that the industry supports 1.9 million workers across all 50 states and contributes $38 billion to over 330,000 businesses.1
The employment generated by this industry is not limited to big-name movie stars, but also involves costume designers, camera operators, writers, composers, set designers/builders, accountants, and many others. In Louisiana, for example, after the production incentive bill was passed in 2005, it was reported the industry added 13,445 jobs and created an additional $336.3 million in output over the prior two-year period.2
Similarly, New York Comptroller Thomas DiNapoli issued a report crediting the film production incentive programs with driving $7 billion into the state's economy between the programs' launch in 2004 through 2008. The published report also noted the incentive programs contributed to the employment of approximately 63,000 people in 2008, adding as much as $5 billion in wages to the New York economy and increasing state and local tax revenue.3
This sizable financial boost to state and local economies is one of the reasons film and television tax credits and incentives have become so popular in the various state and local jurisdictions. These financial incentives, along with a combination of lower costs, infrastructure, and technical talent are enabling states such as Georgia, Louisiana, North Carolina, New Mexico, and New York to lure film and television production away from California.
Although California in 2012 had 52 percent4 of all production jobs, the trend is that competition is shifting those jobs to other states, which perhaps one day could challenge Hollywood as the heart of the entertainment industry in the United States. In fact, the competition is so fierce that as of 2014, 39 states and Puerto Rico have some type of film production incentive on their books.5
While the incentive type (tax credits, exemptions, cash grants, locations at no cost, etc.) and size vary from jurisdiction to jurisdiction, they all share a similar goal, namely, to lure film or television production and drive economic growth. February’s issue of “Credits & Incentives talk with Deloitte,” provides some examples of available tax credits and incentives.
2 Key Economic Impact Findings for Louisiana Film Industry: Summary, Louisiana Department of Economic Development, December 2006.
3 Szalai, Georg, N.Y. film tax credit is economic driver (13 October 2010).
4 Film and Television Production: Overview of Motion Picture Industry and State Tax Credits, The Legislative Analyst's Office: www.lao.ca.gov.
5 Connecticut, Idaho and Oklahoma provide film production incentives; however, incentives programs in these states have been suspended, or funding has not been provided.