We break down the pros and cons of tax incentives for films: as an actor, it’s important to know if your state is bringing in work!
States offer tax incentives for all sorts of businesses and types of work in hopes of bringing money into the local economy. Most states have or have had some sort of tax incentive program for film production done within the state. However, recently there has been a great deal of debate on the subject, both in favor of increased funding and in elimination of film commissions. So should states fund tax incentives for film and television work, or are film commissions a waste of money?
Film commissions are businesses in and of themselves and bring in money. A state could easily allow anyone to film anything on public property at any time without the need for permission. However, that would be a missed opportunity by the state for income. To film on location, permits and fees are required. This is essentially instant income for the state. It is the job of film commissions to collect these fees and oversee projects, but even more so their work is in advertising. Filmmakers are working on a budget and seek the best deal when choosing locations. A filmmaker may only need a location as simple as a house. What will make him choose a house in Virginia over a house in Oregon? That’s where tax incentives come into play.
States offer tax incentives for filming within their borders. Tax incentives work like a credit, say 25% off your total bill. These policies vary from state to state. Some offer reimbursement of all sales tax, others offer discounts on local labor hired, or percentages back on income tax. What the film productions bring is expenses. They have to book hotels, eat meals out or hire catering, purchase small necessities, and so on. All of these little things add up. The longer the production, the longer they’ll be in town using your local businesses. This is why states want filming to be done in the first place, to bring those budgeted dollars into their local economy.
While any production can mean money for the state, really what most states want is big projects. The bigger the better. If A-list celebrities are going to be in it and it’s slated as a summer blockbuster, even better. A state can then use this as a tourist draw, which will bring in big money later on. Millions of people visit the old Cheers bar in Boston each year because they loved the show Cheers so much. The city makes millions on that one location alone. One of the biggest tourist attractions in Hawaii, a state known for its tourism. The helicopter tours showing off all the Jurassic Park locations. Post-release tourism can be huge for a state; you just have to market these attractions like you would anything else.
One of the smartest things a film commission can do is seek out productions. Instead of waiting for inquiries about location uses and permits, start making phone calls to filmmakers and seeing what you can do for them. Film commissions who are active sellers will be more likely to see the benefits of offering tax incentives because those will be the selling points which bring productions to their states. Commission representatives should read the trade papers to see what deals are happening then start getting on the phone to negotiate a deal with the producers. Films almost always end up over budget, so any incentive which might save the filmmakers money will be something they’ll want to discuss.
The only way a state can feasibly offer tax incentives and manage the day-to-day inquiries as well as the actual projects themselves is to have a film commission. This office can employ one person or one hundred people, depending on the need. Having an official business, such as a film commission, does cost money. There are salaries to pay, rent, advertising, and everyday expenses (which add up quickly).
While the motto of “you have to spend money to make money” is true, most of the time there is a point where it isn’t worth the investment. For some states, funding a film commission may not be worth the time and money because the state doesn’t receive much interest for filming. Now the flipside says the more work you put into the program and the better the incentives you offer, the more likely there will be interest. However, some states simply have less to offer than others for film and television work. You won’t find any beaches to use in Kansas, for instance. There are lots of homes and fields and barns, yes, but if the state has to offer such as a high tax incentive to get productions there in the first place, then the state may end up losing money, which then obviously isn’t a worthwhile effort.
Overall, I think it’s smart for states to run film commissions. Like anything else, it is an investment and should be treated as such. Yes, it does take work and cost money upfront, but you have to think long-term. A state should be invested in the long-term growth, not the short-term profits.
– Catrine McGregor
Catrine has cast well over 400 projects, including films, TV, IMAX, commercials, webseries and video games. She is a member of the prestigious CSA (Casting Society of America). During her forty year career in the film industry, Catrine has worked extensively all over the US as well as Europe and Africa. She prides herself in discovering and developing new talent, and has done so with many people that you see every day in films and on TV.
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Last modified: August 13, 2017