Minimum Wage Bill Features Film Trailer

What do the makers of “The Blair Witch Project” and a hamburger flipper at McDonald’s have in common? They both have a stake in the struggle in Congress over raising the minimum wage.

Buried inside a Republican bill to raise the $5.15 hourly minimum wage for entry-level workers is a provision that would provide a tax credit for independent film and television producers.

The credit, one of several tax breaks that Republicans have considered including in the minimum wage bill to make it more palatable to conservatives, is aimed at stemming the increasing practice of filming movies and television shows in other countries to reduce their costs--so-called runaway productions.

The tax break idea enjoys bipartisan support but faces many obstacles. It is strongly opposed by an influential Republican, House Ways and Means Committee Chairman Bill Archer (R-Texas), who wants it dropped from the minimum wage bill because it has not been reviewed by his committee. Also, some critics are concerned that pornographers would benefit. And there are growing doubts about whether House GOP leaders ultimately will bring the tax cut and wage hike bill to a vote before the end of this year.

It adds up to a bill in flux as Republicans search for a combination of wage and tax provisions that will win majority support.

Still, the fact that the production issue has surfaced as part of the year-end legislative jockeying is a sign of growing congressional interest in a problem that is a major concern in Hollywood.

“Whether it stays in [the minimum wage bill] or not, this issue has legs,” said Rep. Gary A. Condit (D-Ceres).

“If we do not engage on this issue, we will find that we will have irretrievably lost U.S. jobs,” said Rep. Xavier Becerra (D-Los Angeles), who co-sponsored the tax break with Rep. Jerry Weller (R-Ill.).

The issue also reflects the irony of political attitudes toward the entertainment industry. Having spent much of the year bashing films, television programs and other products of popular culture for their corrosive effect on traditional values, many lawmakers still are looking for ways to slip in a last-minute benefit for the industry.

“It’s easy to bash them in public, but when you have your hand out [for political contributions] in private, you want to do something to show them you value them,” said a California Democrat who asked not to be named.

At issue is a proposal to provide tax credits to cut labor costs for independent film projects. The credit would equal 20% of the first $20,000 of wages paid each year to employees working on the production of a motion picture, miniseries or pilot. Targeted to low-budget operations, the credit would only apply to employees on projects costing $10 million or less.

“We’re not here to help Steven Spielberg,” Becerra said.

According to a study commissioned by the Directors Guild of America and the Screen Actors Guild--two groups actively lobbying for the tax credit--the number of “runaway productions” grew from 100 in 1990 to 285 in 1998. Most of these productions are going to Canada, which offers large financial incentives.

The effect is not limited to Southern California. Weller latched on to the issue because some of the original “Blues Brothers” movie was filmed in his Chicago-area district. But when it came time to shoot a sequel, the Chicago scenes were filmed in Toronto.

“Even more embarrassing were the telephone calls from the Toronto film office to the Chicago film office asking advice on how to make Toronto more Chicago-like,” he said.

The film tax-credit proposal surfaced in the minimum wage debate after House GOP leaders told Rep. Rick Lazio (R-N.Y.) and other party moderates who support a hike of $1 over a three-year period to draft a bill that would link the increase to a package of tax cuts for small businesses. The cuts would help these businesses absorb the increased payroll costs. Lazio included the film tax break in his bill, co-sponsored by Condit.

However, the House Ways and Means Committee usually writes tax bills, and Archer has insisted that the wage bill include no tax cuts that have not been previously approved by his panel. He introduced his own version of the bill that dropped the film provision and other credits he opposed.

GOP leaders said that they would not force the provision on Archer. “Whatever comes to the floor has to have Archer’s approval,” said Michele Davis, spokeswoman for House Majority Leader Dick Armey (R-Texas). “If [film tax break supporters] could talk Archer into it, that would be added.”

Other critics raised the question of whether the tax break would benefit makers of pornography, whose budgets would be low enough to qualify for the credit.

“The biggest benefactor may be the adult film industry,” said a senior House GOP aide, who asked not to be named.

House Democrats considered including the tax break in their version of a wage hike and tax cut bill but decided against it because of concerns about the pornography issue, a Democratic aide said.

Weller insisted that the bill contained safeguards against pornographers qualifying for the benefit. But sponsors were concerned enough about the complaint that Becerra and other supporters said they were looking for additional ways to make clear that pornographic productions would not qualify for the benefit.

“It really is a red herring,” said Gary Gasper, a lobbyist for the Directors Guild of America. “Clearly the sponsors never intended that to happen.”

Meanwhile, far broader forces have clouded the prospects of the entire wage hike and tax cut bill. GOP leaders said that they would not bring it to the House floor until the Republican version has enough votes to pass. The votes are not there yet because many Republicans oppose any wage hike--even when linked to a tax cut.

Most Democrats are shunning the Lazio bill in favor of a Democratic alternative because they think the GOP version raises the wage too slowly and cuts taxes too much.

Proponents of the film tax credit remain confident that, regardless of the provision’s short-term fate, the issue will not go away.

“It’s out of the water,” said Becerra. “Now it will always be on the radar screen.”