Surprise fun fact about the $700 billion bailout bill the Senate just approved: the tax cuts included in the revised version could save movie and TV producers who shoot in the U.S. more than $470 million over the next 10 years.
Phew! Thank goodness someone’s looking out for the struggling studios, who are ironically also claiming their biz is recession-proof.
More loathsome: The pro-film and TV industry tax breaks were backed by the MPAA, Directors Guild of America and Independent Film and Television Alliance. How heartening that at this time of national crisis, lobbyists could still succeed at influencing legislation.
LA Times: That’s not a lot of money, given that the average studio movie costs $106.6 million to make and market, but it could keep some low-budget productions — and jobs — from going offshore.
Hollywood has long sought measures to curb so-called runaway production, which it blames for causing thousands of job losses in Southern California as filmmakers have fled to Canada and other foreign countries that offer cost savings through tax breaks and other incentives.
Indeed, Southern Californians have complained about tax cuts causing TV productions to be shifted elsewhere, like New York (which is what happened with Ugly Betty). But, instead of solving this problem locally, Hollywood got Congress to expand the tax cuts for films and TV shows that shoot in the U.S.
One provision would provide film and TV producers with the same tax deductions that American manufacturers such as General Motors Corp., Boeing Co. and Xerox Corp. receive for making their products in the U.S.
Specifically, the legislation would allow filmmakers who shoot in the U.S. to qualify for a tax deduction granted in 2004 to domestic manufacturers that capped the top tax rate at 32% instead of 35%. Additionally, the tax package lifts the budget cap on the existing tax deduction, which was limited to movies that cost less than $15 million to make — in effect excluding most studio films, which cost a lot more.
Now producers would be able to immediately deduct all production costs up to $15 million, regardless of the movie’s total budget. The change also extends the existing credit, which was due to expire this year, to December 2009.
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