Hollywood would get a little unexpected boost from the proposed $700-billion bailout of the nation’s financial system.
The bill wending its way through Congress would provide tax breaks worth more than $470 million over the next decade for movie and TV producers that shoot in the U.S.
That’s not a lot of money, given that the average studio movie costs $106.6 million to make and market, but it could keep some low-budget productions -- and jobs -- from going offshore.
Hollywood has long sought measures to curb so-called runaway production, which it blames for causing thousands of job losses in Southern California as filmmakers have fled to Canada and other foreign countries that offer cost savings through tax breaks and other incentives.
One provision would provide film and TV producers with the same tax deductions that American manufacturers such as General Motors Corp., Boeing Co. and Xerox Corp. receive for making their products in the U.S.
Specifically, the legislation would allow filmmakers who shoot in the U.S. to qualify for a tax deduction granted in 2004 to domestic manufacturers that capped the top tax rate at 32% instead of 35%. Additionally, the tax package lifts the budget cap on the existing tax deduction, which was limited to movies that cost less than $15 million to make -- in effect excluding most studio films, which cost a lot more.
Now producers would be able to immediately deduct all production costs up to $15 million, regardless of the movie’s total budget. The change also extends the existing credit, which was due to expire this year, to December 2009.
Representatives of the Motion Picture Assn. of America, the Directors Guild of America and the Independent Film and Television Alliance, which backed the measures, said it was premature to comment because they had not been approved.
The provisions were part of a broad tax extension bill approved earlier by the Senate and then folded into the revised bailout legislation that it passed Wednesday.