The movie industry is a rare bright spot in the economy. But the billions of production dollars and the business they generate are at risk of going overseas. Studios rely on tax breaks to bring movie budgets down, and if they don't find them stateside, then "Sayonara." Nearly $250 million in federal tax breaks were eliminated from the stimulus bill and now key state incentives could be cut due to budget shortfalls.
Here at Tribeca the big question is what will come of the Empire state's sweet and oh-so-popular 30 percent tax incentive. On February 2 the state suspended its incentive, having already committed so many millions of dollars and its coffers were drying up. After much protest from the industry, at the beginning of April the state announced it's extended the incentive for another year. The two month suspension did some damage: a number of shows planning to shoot pilots in New York City moved elsewhere, like Toronto. And now industry players and local businesses are pushing to make the tax breaks permanent.
So far, New York's production credits have paid off, big time. Ernst & Young estimates that the $690 million the state has paid out so far has generated $2.6 billion in taxes. Advocates of making the incentives permanent say it would create and preserve 19,000 local jobs while generating some $200 million in annual tax revenue.
Competition for production dollars is intense; over 40 states have some sort of tax incentive. And states like New Mexico and Louisiana have hefty tax breaks and new facilities to attract films and to encourage ongoing TV series to set down roots. Studios have little reason to be loyal. They'll pick up and move to Connecticut if that means they can save a third of their budget.
Entertainment is America's biggest export and the MPAA wants to keep the production of that export local. Dan Glickman, MPAA's chief is encouraging New York to commit to the incentive for at least another five years. He says incentives are directly responsible for making New York the second most popular state for film and TV production, with over 30,000 people directly employed and $7 billion in wages. The tight credit markets have hurt film financing, and now fewer films are being made, so why not keep those jobs and all those dollars here in the U.S.
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