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in Filmmaking
on Feb 7, 2009

Stripped from the version of the economic stimulus bill being sent to the Senate for vote are two provisions that affect the film community. First, a bill offering a tax break for film production that appeared in the House version was cut, and, second, increased funding for the National Endowment for the Arts was eliminated.

Jim Puzzanghera reports in the Los Angeles Times, explaining that the film provision consisted of a bonus depreciation tax break allowing investors to take an immediate 50% write-off on projects begun in 2009. (Here I need the help of some of our regular tax-break-savvy readers because this is not my expertise, but my understanding is that Section 181 of the Jobs Creation Act, which is still in effect, allows for a 100% write-off against passive income in the first year for up to the first $15 million of production costs; the House provision in the stimulus plan, thus, would allow larger budgeted films to qualify for a tax break.)

From Puzzanghera’s story:

The MPAA argued that filmmakers should get the same depreciation tax break in 2009 as other businesses in the bill.

“Every sector of the economy is eligible, plus software,” said Michael O’Leary, the group’s chief counsel for federal affairs and policy. “Our view is films are intellectual property the same as software, [and] we create jobs and tax revenues.”

The so-called bonus depreciation in the stimulus package is designed to spark economic growth. It gives companies an incentive to make large capital purchases in 2009 by increasing the amount of the cost they can write off in the first year.

Baucus said the movie industry incorrectly had been left out of previous versions of the temporary bonus depreciation tax break.

“The film industry is like any other industry: like the steel industry, like the auto industry, like other manufacturing industries,” Baucus said.

Senator Tom Colburn (R-Okla) argued against including film production in the bill, saying, “They [the film industry] has their best January ever.”

Michael Kranish at the Boston Globe reports on the reaction to the House’s increased $50 million in the bill of National Endowment for the Arts funding — spending that was stripped from the Senate compromise.

While the NEA money is a minuscule portion of the $819 billion House bill, it has become a lightning rod for some critics, who question whether the dollars for the arts will create many jobs – and who see the money as a symbol of House Democrats trying to lard up the plan with spending wish lists that have been pent up for years.

The criticism has reached such a crescendo that some arts advocates are concerned that the push for the $50 million could backfire, reigniting a debate over the value of taxpayers funding everything from “poetry out loud” events to community theater.

Robin Bronk, executive director of the Creative Coalition, argues for the spending on The Huffington Post:

Why is it so hard for some to realize that jobs in the arts support millions of Americans and are no less worthy than any other job that puts food on the table? Economic studies indicate that 2.98 million Americans are employed in the arts or in arts-centric businesses. Each dollar allocated to the arts not only supports those individuals; the benefits flow outward to their communities and to other businesses. Movie production doesn’t require only actors and directors. Stay for the credits after a film ends and you can’t help but notice the incredible army of workers required to bring a story to the screen. In turn, each of those individuals and businesses spends money and pays taxes in their communities. The economic returns and stimulative effects are clear.

Beyond the finances, though, investing in the arts during these tough times can ensure that America doesn’t lose a generation of creative talent to our temporary economic woes. Somewhere in America today, there are individuals with the potential of Orson Welles and the artistic gifts of Mark Rothko. It is foolhardy to attempt to save our economy by ignoring our talent.

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