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The tax break for Feature Films created this year has apparently been stripped out of the stimulus package thanks to the efforts of a few sound-bite seeking politicians like John McCain who saw an easy publicity mark and went after it.  In doing so we are losing not just a direct, quick, and effective stimulus to the economy but also one which could in fact become revenue producing.

There was a production boom in the industry in the late 70's and 80's thanks to an effective tax shelter program which proved to be a boon to both the Major Studios and, perhaps more importantly, Independent Film Production.  We could recreate that stimulus with this opportunity which could reward creativity in financial structuring and help the Government increase revenue.

Taking a lead from the executive compensation cap Obama announced today, what they should do is to offer a conditional based tax break for Movies produced this year under similar guidelines.  Imagine a deal like this: for a film taking the tax break, compensation for any individual would be capped at $500,000, extra compensation would be allowed in the terms of net points in the film after the amount of tax credit is paid back to the Government from revenues, and an additional residual paid to the Government at a rate of 50% of the percentage that the tax credit is to the sum of the total budget plus the credit.  In essence, the Government would become an investor in the film without laying out any cash and paid back under the same guidelines and pari passu with any investor.  Films produced under the program would stimulate the economy immediately in terms of jobs, payments to vendors, location and permit fees, hotel, restaurants, etc...countless direct payments into the economy while potentially paying back the lost revenues from taxes and in some cases going beyond with profit payments as well.

Our Senators (are you listening Boxer and Feingold?) should be using this opportunity to look for creative solutions to respond to any criticism of programs before just rolling over like they've done today.

Originally posted to dougdilg on Wed Feb 04, 2009 at 09:48 AM PST.

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Comment Preferences

    •  What about preserving the Hollywood tradition... (1+ / 0-)
      Recommended by:

      of "taking care of our own"?

      I'm all for putting Hollywood back in the stimulus, but I wonder whether powerful Hollywood moguls like Jeffrey Katzenberg should enjoy tax breaks at a time when he has decided to use his prestige to convince The Industry that closing the Motion Picture hospital and sending over 130 of its elderly and most frail residents of long term care packing is "the right thing to do."

      Shame on Hollywood.  Shame on MPTF.

  •  GOPers say "boo," and Dems shiver. (2+ / 0-)

    "...America can change. Our union can be perfected." President-Elect Barack Obama

    by Jack Dublin on Wed Feb 04, 2009 at 09:52:23 AM PST

  •  I'd like to see the U.S. bring out a full-fledged (1+ / 0-)
    Recommended by:
    Saving the Lives of Our Own

    Tax Credit system like our friends in Canada have for filmmaking.

    I doubt its going to happen though. Too many people whining about "corporate welfare" even though a film tax credit would create good union and non-union jobs.  

    "Cunnilingus and Psychiatry is what got us here," Tony Soprano

    by Larry Madill on Wed Feb 04, 2009 at 09:55:13 AM PST

    •  I'd like to see a return to... (2+ / 0-)

      ...the anti-trust provisions of the 1948 US vs. Paramount ruling, which ushered in an era of independent film-making that flourished in a truly competitive "free market" in which audiences were able to pick from diverse options. Little wonder that Reagan did everything he could during his two terms to completely overturn those provisions, returning ownership of the theaters to the major studios and effectively shutting out the independents.

      Ever wonder why you couldn't go see a prurient, lascivious piece of exploitation sleaze in a theater since the '80s? Because the majors don't have to sell it you. You now get to choose between inoffensive and mild....

      My other car is a pair of boots.

      by FutureNow on Wed Feb 04, 2009 at 10:16:18 AM PST

      [ Parent ]

      •  That would be welcome but I got to wonder (1+ / 0-)
        Recommended by:
        Saving the Lives of Our Own

        if it matters. I tend to think that in 10 years 90% of everything you are going to watch is going to be dumped directly into your living room and onto a 40 inch T.V.

        I tend to think in ten years Theaters will essentially become theme park rides where you go once or twice a year to see "The Dark Knight" or "Bond 421" or whatever. But you'll end up staying home for a more quality experience like "Slumdog Millionaire" or "The Wrestler".

        "Cunnilingus and Psychiatry is what got us here," Tony Soprano

        by Larry Madill on Wed Feb 04, 2009 at 10:29:53 AM PST

        [ Parent ]

  •  Where does this stop? (2+ / 0-)
    Recommended by:
    Wisper, notquitedelilah

    Should the government become "partners" in everything? This was more about payback than anthing else and deserved to be defeated.

    •  Well, Canada has built a strong economy (3+ / 0-)

      and a lot of it is built around film and television production, that is in itself built on a tax credit system that encourages film production. Hell, the U.S. used to have something similar up until the late 70s.

      We aren't talking about "becoming partners". We are talking about providing incentives that create high paying jobs and also encourages diverse voices to add art to our cultural lexicon.

      "Cunnilingus and Psychiatry is what got us here," Tony Soprano

      by Larry Madill on Wed Feb 04, 2009 at 10:04:19 AM PST

      [ Parent ]

    •  It could stop after 1 year. (1+ / 0-)
      Recommended by:
      Saving the Lives of Our Own

      If the idea is to stimulate the economy, this is one way to do it fast.  There are projects sitting there waiting to be financed.  This could open the gates to financing and people would be put to work with very little start up time. The tax credites don't have to be open-ended but the returns could end up being so.

  •  Ive eaten prosciutto (1+ / 0-)
    Recommended by:

    that had less pork in it then this provision.  I was glad to see it defeated.

    There are currently ONE-HUNDRED AND TWENTY Seante Amendments to the Stimulus bill not counting any that were introdced today.

    Unreal.  The Government is not the "Banker" for every good idea in this country.

    This bill was supposed to focus on key areas of Economic Stimulus and has turned into a bottomless pit of "Wants".

    At this point I wonder if it would be better to vote it down completely and have the House start over.

    Christ... we don't have time to be arguing this shit.  We NEED this stimulus.  NOW!!!!!  People are suffering and losing their damn houses/jobs/lives out there.  

    This is such Washingtonian Performance Art.

    At its worst.

    Thinking men can not be ruled. --Ayn Rand

    by Wisper on Wed Feb 04, 2009 at 10:07:43 AM PST

    •  Where's the pork? (1+ / 0-)
      Recommended by:
      Saving the Lives of Our Own

      There's a lot of beef in this.  Movies are created on the most part by middle-class Union members who are getting slammed by this economy.  This is a stimulus which would be more immediate than most.

      •  The Movie Industry has a LOT of tax breaks (1+ / 0-)
        Recommended by:

        As I mention down thread.  There are specific incentives for them to film in America with even MORE tax breaks to be added if they film in economic-needy areas (as defined by the criteria in the code).

        They get breaks and write-offs for environment protection when filming outdoors.  They get discounts to film on public land.  They get breaks for hiring disabled, at-risk, and veteran employees.  And I'm talking about movie-industry specific tax breaks here (though, I think perhaps TV and maybe even radio would also qualify).

        (And for the record... I think these tax breaks are great incentives and as far as I know, no one is trying to rescind them)

        The Movie Industry had a great year last year.  While the rest of the American Economy was tanking the movie industry was down by less then one-half of one percent from 2007 (in which is posted a nearly 5% gain)

        The movie industry just had one of its best Januarys EVER.  Now.  In 2009.  When people are losing thousands of homes and jobs by the HOUR, the movie industry just had a BANNER month.

        WHY then do we need to shill out a Quarter of a BILLION dollars of US Tax money to "help" them?

        (and note: This money is not "Free".  It is being borrowed from China to be passed on as debt to American citizens)

        Thinking men can not be ruled. --Ayn Rand

        by Wisper on Wed Feb 04, 2009 at 10:46:16 AM PST

        [ Parent ]

        •  There's a difference between (0+ / 0-)

          distribution and production.  No one is offering a tax break to theaters and distributors who had the banner month.  Production though is down and independent production is way down.  What is California's unemployment rate? Something like 9%.  In incentive which would help finance Production is a true stimulus.  The state incentives are for the most part tools to help stretch the dollar of the budget, not finance the film in the first part.  And even programs like Arizona's which offer financing it is dependent upon distribution which gears it more toward Studio production and not Independent filmmaking.

  •  Actually, why not open it up bigtime... (2+ / 0-)

    Rather than limiting lending to specific industries, why not simply open up federal loans or tax credits to ANY legitimate business whose owners/employees agree to a cap (say, 150k/yr) for keeping people employed?

    I'm sure there are a lot of struggling small businesses out there that could use a loan to keep people employed while the credit problems are being worked out of the system.

    While a lot of businesses fail in the first few years, loaning to established small businesses would impact a hell of a lot of people more directly than many of the proposed 'stimuli' I've seen suggested.

    Hi. If I quit replying to your comments, I've either A) left the thread, B) felt it didn't require a reply, or C) decided you're an idiot. You choose.

    by drbloodaxe on Wed Feb 04, 2009 at 10:07:49 AM PST

  •  I would be in favor of more tax breaks (0+ / 0-)

    to encourage TV and film to do more work here in America. A ridiculous number of television shows are produced in Canada. As much as I love Canadians anything to create more jobs in the states should be encouraged.

    Is that your stimulus package, or are you just happy to see me?

    by eclecticbrotha on Wed Feb 04, 2009 at 10:08:22 AM PST

    •  They are already there (2+ / 0-)
      Recommended by:
      CParis, notquitedelilah

      There are tax cuts for working in America.  There are MORE tax cuts for working in key economic-needy areas.  There are tax cuts for observing environmental protection practices when filming outdoors.  There are tax benefits for employing at-risk, disabled and veteran employees.

      Plus, all films in Hollywood employ Unionized labor.

      The Film Industry had a PHENOMENAL year last year and just had the best January EVER.

      They don't need another QUARTER of a BILLION dollars from our tax money!

      Thinking men can not be ruled. --Ayn Rand

      by Wisper on Wed Feb 04, 2009 at 10:10:55 AM PST

      [ Parent ]

  •  Hollywood is part of the economy too... (2+ / 0-)

    ...right-wingers who rant about "immoral, politically correct, decadent" Hollywood and their red-state politicians are more than happy to have tax and economic dollars come to those same states to make movies. As long as they can go back to bashing them when they leave.

    People like to visit where their favorite movies have been filmed. Think of what "Brokeback Mountain" did for the west or "Field of Dreams" for Iowa or "Steel Magnolias" or any other film associated strongly with a certain place. You'd think they'd WANT that, wouldn't they?

    They want to have their cake and eat it too!

  •  The film industry can creat it's own stimulus (1+ / 0-)
    Recommended by:

    by simply not paying their stars 30 million for 8 weeks of work on a film plus a cu of the merchandizing, and 1 million per episodes for 1 week of television work. I know that my examples are the top of the scale rates, but Hollywood is the only film industry in the world that pays such ridiculous fees to it's talent.
    Hollywood's exorbitant production cost are almost entirely self induced and not necessarily conducive to a better art form. Better films made for a lot less are made every day all over the world as well as in this country.
    Hollywood doesn't nee tax payer money, they should stop wasting their own.

    The Shape Of Things "Beware the terrible simplifiers" Jacob Burckhardt, Historian

    by notquitedelilah on Wed Feb 04, 2009 at 10:18:57 AM PST

  •  Also, Arts Fundinh (2+ / 0-)

    There ought to be some arts funding in that bill as well as tax incentives for film producers. I work in documentaries, and our little corner of the industry is highly dependent on funding from states and the federal government. Grants for filmmakers and other artists create thousands of jobs.

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