Why Film Production is Leaving the U.S. Tax Credits Aren’t Cutting It

Film production in the United States is facing a significant decline, with a reported 26 percent drop compared to 2021. This slump isn’t limited to Hollywood—it’s a nationwide trend, exacerbated by increasing global competition and insufficient tax incentives.

Los Angeles, once the epicenter of film production, is witnessing a sharp decrease in activity, partly due to a lack of adequate tax credits. Although states like California offer incentives, they are often not enough to keep productions from seeking more favorable conditions abroad. For instance, despite California’s $330 million annual incentive, there’s pressure to increase it to $750 million to compete with international locales.

Georgia, known for its generous tax credits with no cap, is also feeling the sting of productions moving to places like London. However, it’s not just about tax incentives. The strength of the U.S. dollar abroad and the availability of local crews can make overseas filming more attractive. This shift is evident as producers eye countries such as Bulgaria, which offer enticing financial advantages and a growing film industry.

In response to this trend, states like Louisiana are exploring ways to attract and retain film productions. For example, Louisiana recently decided against eliminating its tax credit, instead opting to reduce it slightly. The state aims to bolster its crew base and court indie productions by maintaining competitive incentives and looking beyond its borders.

North Carolina’s film scene is attempting a comeback after a reduction in incentives in 2014 led to a mass exodus of local crews. Despite new facilities and increased incentives, the demand for skilled workers remains a challenge. Deborah LaVine from UNC’s School of the Arts notes frequent inquiries from producers looking for talent or a reliable filming base.

Interestingly, Nevada is pursuing a different strategy by proposing incentives for building infrastructure instead of direct production. This is seen in deals with major studios like Warner Bros. and Sony, which could provide a more stable environment for future productions.

For indie filmmakers, the states’ offerings vary. In California, the waiting game for tax credit approval can be a hurdle, but other states, like Louisiana and Oklahoma, provide simpler, more predictable systems. Kentucky, for instance, with its $75 million incentive, encourages indie projects by offering easily accessible rebates and supportive local government efforts. Lisa Brin of FilmLEX emphasizes the willingness of local authorities to facilitate filmmakers’ needs, such as closing off streets for shoots at minimal cost.

One of the stark contrasts with other countries like Bulgaria is the absence of a national film office in the U.S. Katie Pryor, co-founder of Film USA, advocates for the establishment of a National Film and Television Office to centralize efforts and potentially regulate national incentives. This proposal highlights the lack of a cohesive strategy in the U.S., which sees a substantial portion of its film investment spent overseas.

The current state of film production in the U.S. highlights the need for a reevaluation of incentives and strategies. Without robust support and infrastructure, productions will continue to seek greener pastures abroad. Addressing these challenges could involve both enhancing state-level incentives and exploring national solutions.

Source: Yahoo