Hollywood Taxes for the Film Industry

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The article “Hollywood Asks California to cut Taxes for the Film Industry” discusses a petition launched by Film Works aimed at convincing the state of California to implement tax cuts for the film industry. Film Works is a company that advocates for the rights of stakeholders in film production and distribution. In order to make the petition successful, the company launched an online appeal in order to elicit support from film enthusiasts.

The company’s main goal is to lobby for creation of tax incentives that will boost the growth of the film industry in California (Daily Caller News Foundation, 2014). Many states have implemented tax incentives for their film industries. Therefore, California is in danger of losing film producers, actors, and distributors to these states. Hollywood put California on the world map for being the unrivaled hub of film production in the world.

However, this is changing due to the decline of the film industry in the state. The reason for the petition is burgeoning operating costs that have curtailed growth (Pomerantz, 2014). In the past decade, costs have increased significantly. Many states have created incentives like tax credits in order to encourage film production (Daily Caller News Foundation 2014).

According to Film Works, failure to pass tax-cuts legislation might lead to loss of California’s monopoly in film production. The state is at risk of losing to other states because of lack of competitiveness (Daily Caller News Foundation 2014). Lowering taxes will give production companies an opportunity to compete effectively with upcoming companies around the country.

Film Works bases the argument on what happened decades ago when California lost its competitive edge in the aerospace industry. It failed to create tax incentives that would encourage companies to invest more money in the state. Companies moved to states that had better business environments. Thousands of jobs were lost and the rate of unemployment soared (Daily Caller News Foundation 2014).

It is important for the governor to act swiftly because the film industry has experienced significant decline in the last decade. For instance, between 2005 and 2013, the state lost 8,500 jobs (Daily Caller News Foundation 2014). According to the petition, Film Works ascribes loss of jobs to a declining market share of one-hour TV series by 38% (Daily Caller News Foundation 2014).

A report released by the San Francisco Film Commission revealed that loss of the aforementioned jobs had a twofold effect. First, it raised the rate of unemployment in California, and second, it affected the economy. According to the report, the economy loses about $112,000 for every job lost in the film industry (Daily Caller News Foundation 2014).

The feature-film sector has also experienced significant decline in the past fifteen years. The decline prompted the state to give an incentive of $100 million in tax cuts (Daily Caller News Foundation 2014). However, it was insignificant and failed to boost the film industry. New York, Louisiana, and Georgia are examples of states that have cut taxes (Daily Caller News Foundation 2014).

The cuts have increased economic growth of individual states. After passing tax credit legislation in 2002, Louisiana experienced a surge in film production spending. Spending increased by 19,000 percent within a period of eight years (Daily Caller News Foundation 2014). Leading businesses have joined Film Work’s petition in effort to lobby Governor Jerry Brown to enact legislation to boost the declining film industry.

This is important it is a lucrative industry that makes great contributions to the growth of the economy. Supporters of the petition include SAG-AFTRA, Warner Bros, and the county of Los Angeles (Daily Caller News Foundation 2014). The petition was launched on grounds that failure to implement legislation to cut taxes would lead to loss of the film industry’s stakeholders to other states.

Paul Audley reiterated the effect of high taxes on the film industry. Audley said that the industry is waning and urged the governor to act swiftly. He added that high operating costs could drive producers, actors, and film distributors to other states that have better tax incentives (Daily Caller News Foundation 2014). Audley said that the governor has little time left to boost the film industry before stakeholders look for other options.

Research has shown that states that have created tax incentives for the film industry have experienced significant growth (Pomerantz, 2014). The film industry has been a monopoly of the state of California for a long time. However, there is stiff competition from other states that have realized the potential of the industry.

It is important for the governor to create tax incentives for the industry in order to enable it compete with other industries in other states that are growing rapidly (Pomerantz, 2014). Failure to act swiftly will affect stakeholders and the economy. On the other hand, it will lead to loss of jobs and consequently increase the rate of unemployment.

Film Work’s petition is an indication of tough economic times the industry is experiencing. In California, film production is a billion-dollar industry that contributes greatly to economic growth. However, the state has dropped to fourth position with regard to film production in the U.S. (Pomerantz, 2014).

References

Daily Caller News Foundation: Hollywood Asks California to Cut Taxes for the Film Industry. (2014).

Pomerantz, D. (2014). Cameras Rolling Away from California: State Falls to Fourth in Film Production.

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Hollywood Taxes for the Film Industry

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