A Brief Glimpse at Tax Incentives

A few weeks back, the Washington Post Express featured an article about a WAMU study, highlighting DC faltering film incentives program. It stated for every dollar the DC government spent to lure film productions to our nation’s capital, it lost 77 cents. Most backlash was due to the 2010 flop How Do You Know, leaving DC’s film incentives program unfunded since 2011.

“You hear a lot of doom and gloom around film incentives programs. There’s a lot of pressure because these programs are easy targets when budgets get tight. The real story, though, is that most states are continuing as is or even better,” stated Michael McCann, principal at the Film Incentives Group in Philadelphia.

Michael, David Bowers, a CPA also at Film Incentives Group, and Steve Biznow of Media Services co-hosted a panel at the Navy Memorial on “Film Incentives & Software Tools for Film & TV Producers.” The event focused around the basics of tax incentives and the state of different programs around the country.

If you are beginning to pull together your production budget, Michael and David said, one of the first things you need to do is research state film incentives. Every state has different laws regarding casting, payroll, transferable credits, etc. The Film Incentives Group offers a free online film incentives guide and free consultations for filmmakers to help them decide which states might be the best fit for their budgets or needs. For example, Louisiana offers a 30% credit but the minimum spend is $300,000, compared to Massachusetts at 25% and $50,000 minimum.

On the bright side, it turns out Michael is right about the doom and gloom, too. In a follow-up to the WAMU study, ECONorthwest found that DC isn’t performing as poorly as previously reported. DC earns 44 cents for every dollar and the $1.8 million loss from How Do You Know is an anomaly, not a consistency.  DC film incentives should be “scaled, competitive with those offered by other jurisdictions, a mix of cash and non-cash, and targeted to productions with story lines set in D.C.” Hopefully, these studies will help refocus and refund the film incentives program in DC in the future.

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