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Hollywood Seeks to Be Film King Again With Expanded Tax Breaks

Updated: Apr 7, 2021

March 22, 2021, 3:46 AM

  • Demand for streaming content could spur expansion

  • Lawmakers want to keep homegrown industry happy

Frustrated at losing movie and television production to other states with rich tax breaks, California is looking to expand its own incentives to keep its flagship industry at home.

Lawmakers are considering four bills—and more could be coming—that push against the limits of California’s 10-year-old film and television tax credit program and stay competitive with more generous breaks in states including Georgia, which has overtaken California as the top movie-production state, and New Mexico, which used incentives to land a Netflix Inc. production hub.

More than 30 other states use tax breaks to poach productions, with Hawaii, Illinois, Massachusetts, Montana, and West Virginia weighing bills this year to renew or expand their programs.

Entertainment studios, hit hard by production shutdowns and closed movie theaters during the Covid-19 pandemic, are poised to benefit from the proposals as they race to meet demand for content on streaming services like Disney+, HBOMax, Netflix, Paramount+, and Peacock. They’re part of the discussions but aren’t weighing in publicly yet on the bills.

“Do you want studios to continue to do well but expand in places other than California?” said Thomas Davis, president of the California Council of the International Alliance of Theatrical Stage Employees and business manager for IATSE Local 80. “More studios in Atlanta doesn’t help people in California.”

More tax incentives would be welcome news for studios leaning heavily into streaming, Bloomberg Intelligence Senior Industry Analyst Geetha Ranganathan said.

“This could certainly spur more local investment especially as traditional studios face intense competition from the likes of Netflix and Amazon,” she said.

Too Much Competition

The proposed bills use different approaches to attack the same problem: demand for California’s film and TV tax credit outstrips supply every year. Total annual funding is capped at $330 million, with that total divided into buckets for feature films, independent films, and new, relocating or recurring TV shows, pilots, or mini-series.

Twenty-two out of 61 applicants won awards in the most recent round for feature and independent films announced March 1 by the California Film Commission, which oversees the program. Reese Witherspoon’s film “Ashley’s War” and Jason Bateman’s film “Here Comes the Flood” were among the latest winners.

In the TV category, new shows are crowded out by recurring shows that continue to get tax credits each season. “American Horror Story” on FX, “Ballers” on HBO, and “This is Us” on NBC are among 25 popular shows that gobble up the funding year after year. The two most recent round of TV awards in August 2020 and March 2021 were open only to series relocating to California.


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