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Well, That’s Not a Good Sign

Well, That's Not a Good Sign

Last week Michael Kinsley, a thinker I usually agree with, struck out against what he dubs “Hollywood Welfare” and what us independent film producers call a necessary part of putting together a film: Tax Incentives.

New Mexico under Gov. Richardson was a pioneer in this field. In 2002, it began offering a credit of 15 percent — later increased to 25 percent — of the cost of making a movie in New Mexico (not counting star salaries and the mite paid to writers). Now, 42 states have followed its lead. New York has gone as high as 30 percent. These credits can generally be transferred, saved or used for other things, so it’s no problem if a particular movie doesn’t make money.

“In less than a decade, the absurd notion of welfare for movie producers has evolved from the kind of weird thing they do in France to an unshakable American tradition. “I’m proud that New Mexico has been a leader in this effort,” [Former New Mexico Governer] Richardson wrote.

When such a notable and well respected figure turns against tax incentives in a non-industry journal like Politico it’s not a good sign for those of us trying to make movies outside the Hollywood studio system. But therein lies the problem. People see movies and they think Hollywood excess. Or they see grosses and they think that that money actually goes to the filmmakers.

Unfortunately the reality is more complicated. Film is both an art and a business, which is basically a way of saying it’s a really expensive art form. Independent films – and to be clear independent films mean films that are financed without distribution in place, ie. they are independent of distribution – are put together with very risky financing plans that are difficult investments to recoup on. Without major bankable celebrities (think Tom Cruise, Sylvester Stallone, Julia Roberts) these films cannot be pre-sold to any distributors. They are referred to as execution dependent (ie. all the risk is assumed by the investors and filmmakers). Unless the project has a foreign born filmmaker and a number of foreign born cast and crew, it’s very unlikely that they will get funded internationally. Most likely someone will lose money on the project. And it won’t be Hollywood or any major celebrity or power broker. It will be someone who took a risk on art.

This is with “Hollywood welfare.”

Yes, people abuse film tax incentives, but what type of advantageous tax position isn’t abused? This is why we have auditors. It’s why states like Louisiana and Michigan have to constantly re-create and modify their programs. Hollywood might not need help but independent filmmaking certainly does. Government should support the art. Especially when doing so injects millions of dollars into a community.

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