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New York Tax Incentives

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By Jack EganNew York’s top film officials hit the road to Los Angeles in early November to trumpet $100 million in new Empire State tax breaks designed to lure productions to Gotham soundstages or keep them from fleeing to cheaper locales abroad.“New York has never had a film and television tax incentive in place, so this is historic,” observed Katherine Oliver, the commissioner for the city’s Office of Film Theatre and Broadcasting. “People here in L.A. have been eager to hear about how they work.”Oliver headed the heavyweight delegation along with Pat Swinney Kaufman, director of the New York State Governor’s Office for Motion Picture and TV Development. In tow were New York studio heads Alan Suna of Silvercup Studios, Hal Rosenbluth of Kaufman Astoria Studios and Jay Fine of Steiner Studios, and also Teamsters official Thomas O’Donnell. Presentations were made at the American Film Market meet, at various studios and to the Motion Picture Producers Association.New York State recently passed a 10 percent refundable tax credit for film and television productions, estimated to be worth $100 million over four years. New York City Mayor Michael Bloomberg is committed to getting the city to pass an additional 5 percent tax credit. Another 1 percent subsidy is available for co-branded marketing and advertising.To qualify for the breaks totaling up to 16 percent, a film or television production must complete at least 75 percent of its stage work in a New York City studio.“When a production stays in the city or state, the economic benefits are huge,” Oliver told Below the Line. “And it’s not just for the people working on the shoot but all the support business that benefit, including hotels and transportation, down to the Starbucks or Kinkos.“We have a lot of movies that shoot briefly in New York City for the famous locations but then go up north to Canada, and on a soundstage in Toronto or Montreal fake New York for the remainder,” she said. “One of the most frustrating things I had to deal with was with Rudy: The Rudy Giuliani Story, about the former mayor of New York that was all made in Montreal. They didn’t even budget for New York City, because they felt it was cheaper to do in Canada.”The New York tax breaks are meant to counteract such decisions, and in one prominent instance they’ve already worked. The film version of Mel Brooks’ musical smash The Producers, which is about the misadventures of putting on a Broadway show, a quintessential New York City saga, was going to be done in Toronto but is now one of the first big movies shooting in New York because of the recently passed state tax incentives.New York, whose entertainment-related businesses already account for an estimated $5 billion in revenues, joins a growing list of smaller states that have enacted tax breaks for filming done within their borders.Illinois passed subsidies after the Oscar-winning musical Chicago wound up being shot in Toronto. Other states that have gotten on the film tax incentives bandwagon because they see it producing jobs, include Arkansas, New Mexico and Louisiana. Ray, the biopic of soul-jazz performer Ray Charles in current release was the first major production done in Louisiana, taking advantage of that state’s incentives.Notably absent from the list is California. The state is already home to the lion’s share of movie and television production, which makes putting into effect added tax incentives a more complex issue, with critics contending that it amounts to a giveaway to the rich at a time when the state is facing severe budget constraints and cutting back many programs.“There’s the state’s budget problem but it’s also more complicated,” said Amy Lemisch, director of the California Film Commission. “For most states, the incentives aren’t that costly, but in California where roughly 200 movies a year already get made, putting into effect a tax break would add up to some really big dollars,” she added. Lemisch was on a recent panel at the Los Angeles Press Club along with Oliver.In addition to the competing state tax incentives, President George Bush in late October signed into law massive tax-cut legislation that includes provisions that for the first time hand out federal tax breaks designed to deter runaway production. At least these apply to California.The rules accelerate write-offs to one year for films with budgets up to $15 million, if 75 percent is spent within the United States. Films with budgets up to $20 million qualify for the improved financing terms if they’re also made in economically distressed parts of the country.The new breaks from Uncle Sam don’t cut costs directly but make it easier for modestly budgeted independent films to get financing, because backers will be able to recoup their outlays more quickly.Final language is still being drafted in Washington. But as Below The Line went to press, independent producers and money men in Hollywood were figuring how to max out the advantages by combining the new federal breaks with lush state incentives like those being put into place in New York.Runaway production could soon mean rushing to the state dangling the most attractive tax lure instead of to a foreign country.

Written by Jack Egan

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