House Bill Aims to Retain Films

Congress’ effort to stem the loss of U.S. film production to cheaper foreign locales moved forward Tuesday with the introduction of bipartisan legislation in the House.

The bill, similar to one introduced this year in the Senate, would provide wage-based tax credits for small to mid-size productions that stay at home.

“This is a $10-billion loss each year to the U.S. economy. I am very much a free trader, but if other countries are providing incentives to lure an industry away, we should at least be able to compete with that,” said Rep. David Dreier (R-San Dimas), who is sponsoring the bill with Democrats Howard Berman of Los Angeles and Charles Rangel of New York.

Productions that go abroad--particularly to Canada--have been a top concern of Hollywood’s labor unions for years. An industry-backed study last year put losses at $10 billion annually--taking into account everything from equipment rentals to dry-cleaning costs. Some observers, pointing out that the United States still far outpaces the rest of the world in film production, have criticized that figure as inflated.

Boosters of tax incentives say they are key to making the U.S. market more competitive with Canada’s government subsidies and preventing escalating losses in an industry the U.S. invented. And, they say, they believe there is a place for their bill in the post-Sept. 11 economic stimulus package.

“Now, more than ever, we need legislation that will help bring these productions and the jobs and revenues they create for the hotels, restaurants, caterers and other businesses back to New York, and back to America,” Rangel said.

The proposed tax credit would benefit productions with wage costs from $200,000 to $10 million. The bottom limit was set to assuage lawmakers’ concerns that pornographers--who almost always operate on shoestring budgets--could benefit. The upper limit was designed to ensure Hollywood’s rank and file would be helped, not the A-list stars and directors whose individual salaries often exceed the $10-million wage cap per production.

The bill would aid productions such as mini-series, cable movies and made-for-television films that have been a staple for actors and other employees who labor, as the industry says, “below the line.”

Under the House bill, a production would have to shoot 75% of its principal photography days in the U.S. The Senate version would require only that a “majority” of work be U.S.-filmed.

Most qualifying productions would get back 25% of the first $25,000 paid per employee; those shot in low-income areas would get 35%. The credits, supporters say, would narrow the gap with Canada, where tax breaks and a favorable exchange rate make it possible for producers to get more out of a tight budget.

The introduction of the bill in both houses of Congress was seen as a significant milestone for industry groups that have worked hard for several years to make legislators aware of so-called runaway productions.

And they say current concerns about the economy have brought into sharp focus the effect that even single films can have on smaller markets.

“The film business is important to the economy. They fill up those airplanes. They fill up those hotels, and that reality should help us if the right people see it and recognize it,” said Dawn Keezer, Pittsburgh’s film commissioner who also heads Film U.S., a group of 200 commissioners who have successfully lobbied lawmakers outside traditional movie-making strongholds.