Tax Credits, Deductions and Exemptions

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    When Taxpayers Fund Shows Like ‘Blue Bloods’ and ‘S.N.L.,’ Does It Pay Off?

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    Gov. Kathy Hochul of New York has proposed an increase in the film tax credit to stay competitive with New Jersey and other states.New Yorkers — and residents of many other states — have paid more for entertainment in recent years than just their Netflix or Hulu subscriptions.Each New York household has also contributed about $16 in taxes, on average, toward producing the drama series “Billions” since 2017. Over that period, each household has also paid roughly $14.50 in production incentives for “Saturday Night Live” and $4.60 for “The Irishman,” among many other shows and movies.Add it all up, and New York has spent more than $5.5 billion in incentives since 2017, the earliest year for which data is readily available. Now, as a new state budget agreement nears, Gov. Kathy Hochul has said she wants to add $100 million in credits for independent productions that would bring total film subsidies to $800 million a year, almost double the amount from 2022.Other states also pay out tens or hundreds of millions each year in a bidding war for Hollywood productions, under the theory that these tax credits spur the economy. One question for voters and lawmakers is whether a state recoups more than its investment in these movies and shows — or gets back only pennies on the dollar.New York has one of the largest tax credit programs and makes most of its data public, so we totaled its spending to see which productions benefited the most. More

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      There’s a Feeling We’re Not in Hollywood Anymore

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      Movies and TV productions are rapidly leaving California to film outside the United States, where labor costs are lower and tax incentives greater. Industry workers are exasperated.It would have been simple to shoot the game show “The Floor” in Los Angeles. The city has many idle studios that could have easily accommodated its large display screen and the midnight-blue tiles that light up beneath contestants.But Fox flies the show’s host, Rob Lowe, and 100 American contestants thousands of miles across the Atlantic Ocean to answer trivia questions about dogs, divas and Disney characters at a studio in Dublin. It makes more financial sense than filming in California.In the past few years, as labor costs have grown after two strikes, producers of reality shows, scrappy indie movies and blockbuster films have increasingly turned away from Los Angeles to filming locations overseas.Those business decisions have considerable consequences for the industry’s thousands of middle-class workers: the camera operators, set decorators and lighting technicians who make movies and television happen. Frustration has reached a boiling point, according to more than two dozen people who make their living in the entertainment industry. They say that nothing short of Hollywood, as we know it, is at stake.“This is an existential crisis — it’s an extinction event,” said Beau Flynn, a producer of big-budget movies like “San Andreas,” which despite being about an earthquake in California was filmed mostly in Australia. “These are real things. I am not a dramatist, even though I’m in the drama field.”Productions have been filmed outside the United States for decades, but rarely has Hollywood work been so bustling overseas at a time when work in Hollywood itself has been so scant. Studios in European countries are bursting at the seams, industry workers say. And film and television production in Los Angeles is down by more than one-third over the past 10 years, according to FilmLA data.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Mercedes’s Most Affordable Sedan Will Be Electric

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      The German luxury carmaker said its latest compact sedan solved problems that had kept people from buying electric vehicles.Mercedes-Benz said on Thursday that the latest version of its least expensive sedan would be available first as an all-electric car and then as a hybrid. And the company will no longer sell a gasoline-only version of the car.That’s a big break from how Mercedes and other established carmakers have typically operated. Until recently, most automakers adapted vehicles designed for fossil fuels to be powered by batteries. The Mercedes sedan, the CLA, which the company unveiled in Rome with the rapper will.i.am, is an example of how at least some established carmakers are developing electric cars first, then adapting them for customers who still want a gasoline engine.The CLA, the first of more than two dozen Mercedes vehicles that will use the same basic technology, is a sign that many global carmakers are placing a priority on electric vehicles even as Republicans in the United States try to roll back Biden-era legislation that was intended to promote battery technology.Yet faced with uncertain demand for electric vehicles and unpredictable government policies, Mercedes is tempering its bets by offering hybrids, which pair traditional gasoline engines with relatively small batteries and electric motors.“If the world is not dominant electric by 2030, we as Mercedes-Benz, as an established manufacturer, we cannot walk away from a significant part of our revenues,” Ola Källenius, the chief executive of Mercedes, said in an interview in Rome. “So indeed, you could call it a hedge.”Mercedes did not disclose a price for the new CLA, but said it would be affordable for owners of the current version, which starts at $45,000 in the United States. Eventually some of the components from the car will be used in sport utility vehicles and a station wagon.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      California Governor Proposes $750 Million in Annual Film Tax Credits

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      Gov. Gavin Newsom wants to more than double the amount the state offers in incentives, which would make its program one of the nation’s most generous.Responding to pleas from California’s film industry, which has struggled to rebound from labor unrest and industry disruption, Gov. Gavin Newsom on Sunday announced a proposal to more than double the size of the state’s film tax incentive program to $750 million annually.If the proposal is approved by the State Legislature, California would offer more money to entice film productions than any state except Georgia, which provides unlimited tax credits. California’s existing program is capped at $330 million annually. The increase would go into effect on July 1, 2025.“California is the entertainment capital of the world, rooted in decades of creativity, innovation and unparalleled talent,” Mr. Newsom said in a statement. “Expanding this program will help keep production here at home, generate thousands of good-paying jobs, and strengthen the vital link between our communities and the state’s iconic film and TV industry.”In recent weeks, state economic development officials and entertainment executives in Los Angeles have publicly expressed concern over the persistent slump in film production, begging officials to do more to keep film shoots in the state.Over the past 20 years, states have aggressively wooed Hollywood, offering movie and television productions more than $25 billion in filming incentives, according to a survey by The New York Times. Thirty-eight states offer some form of incentive, including Georgia, which has extended more than $5 billion in film tax credits since 2015, and New York, which has provided at least $7 billion in credits. More

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      Filmed in New York, Hold the Taxis and Radiators

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      When independent movies like “Rosemead” travel to a state for tax incentives, they save money but add creative challenges.On a rainy morning this past January, Roosevelt Avenue in the Flushing neighborhood of Queens was a stream of yellow cabs, honking buses and weaving cyclists. Nearby, a film crew peering out the windows of a Chinese pharmacy discussed how to make all of that invisible.The film it was making, “Rosemead,” starring Lucy Liu as an immigrant mother with a mentally unwell teenage son, was based on a real-life story and set in the San Gabriel Valley of sunny Southern California. Any signs of the East Coast would need to be hidden. No cabs, no buses, no bare trees and overcast sky.“That’s a very New York-looking trash can,” said Liz Power, an assistant director, ruefully eyeing the green receptacle just outside the pharmacy’s glass door.Filming “Rosemead” in Rosemead, Calif., would certainly have been easier. But the producers had decided on New York over California because of tax credits.According to a survey by The New York Times, states have spent $25 billion on tax incentives over the past two decades to lure Hollywood, often competing against one another. New York State, which writes checks to studios of up to 40 percent of their costs producing a movie or TV show, has handed out more than $7 billion to entice productions from California, which has dedicated more than $3 billion to try to retain them.The movie industry says the incentives help create jobs and spending in the communities where they film, but economists have long been skeptical of whether they create enough value to justify the taxpayer cost. More

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      in Theater

      Does a Smash Hit Like ‘Lion King’ Deserve a $3 Million Tax Break?

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      Broadway is still recovering from the pandemic. A state tax-credit program has helped, but watchdogs say it aids some shows that don’t need a boost.There is no greater success story on Broadway than “The Lion King.” It is reliably among the top-grossing stage shows in New York, where it has brought in nearly $2 billion over its 26-year run; its global total is five times that amount.The musical’s producer is the theatrical division of the Walt Disney Company, an entertainment industry behemoth that earned $89 billion in revenue during its last fiscal year.And yet, the show was one of roughly four dozen productions that have received millions of dollars in assistance from New York State under a program designed to help a pandemic-hobbled theater industry in New York City.Over the three years since the program was established, New York State has bestowed over $100 million on commercial Broadway productions.“The Lion King,” along with other juggernauts like “Aladdin,” “The Book of Mormon” and “Wicked,” each got the maximum $3 million subsidy.The program was initiated by Gov. Andrew M. Cuomo at the height of the coronavirus pandemic, as theaters were nervously preparing to reopen after being shut for a year and a half. It was later tripled to $300 million by Gov. Kathy Hochul, who is now considering whether to seek an extension when it expires next year.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      A Georgia Town Basks in Bountiful Filming. The State Pays.

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      When movies are made in Thomasville, Ga., it welcomes celebrities and an infusion of cash. But the financial incentives that attract studios have cost the state billions.It is no wonder that moviemakers saw potential in Thomasville, Ga., as a stand-in for Main Street U.S.A. Cobblestone streets and mom-and-pop stores speckle the downtown of this city of 18,000 that is caked in red clay soil and nestled among rolling hills.Just as attractive to some of those producers are Georgia’s lavish filming incentives, which have made Thomasville a cost-effective place to make modest pictures with major stars. Dustin Hoffman came for the rom-com “Sam & Kate.” A children’s book adaptation, “The Tiger Rising,” brought Dennis Quaid and Queen Latifah to town.But what is good on the ground for local economies — Thomasville says each of the six movies filmed there has provided an economic boost of about $1 million — can simultaneously be a drain on state coffers.Some Georgia lawmakers wondered whether it might be wise to put some limits on an uncapped tax incentive program that has given billions of dollars to Hollywood studios, scrambling this week in hopes of passing a bill that would modify the program. More

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      Netanyahu Trial Gets a Hollywood Mention From a Political Rival

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      Yair Lapid, a former colleague and now nemesis of Prime Minister Benjamin Netanyahu, testified that he had been asked to help a wealthy film producer with a tax break.The leader of Israel’s political opposition, Yair Lapid, testified on Monday in the long-running corruption trial of Prime Minister Benjamin Netanyahu, recounting how Mr. Netanyahu had lobbied him nearly a decade ago to back tax breaks favoring an influential Israeli film producer.The claim is a small part of a yearslong prosecution in which Mr. Netanyahu is accused of granting political favors to several businessmen and media moguls in exchange for expensive gifts and positive news coverage, charges that he denies.The appearance of Mr. Lapid — once a colleague of Mr. Netanyahu’s and now his nemesis — enlivened a slow-moving courtroom process that has largely receded into the background of Israeli public life since it began with great fanfare more than three years ago.Mr. Lapid served as prime minister for several months last year, before losing power to Mr. Netanyahu, Israel’s longest-serving leader, in December.Mr. Lapid briefly gave evidence about two short conversations with Mr. Netanyahu in 2013 and 2014, when he served as Mr. Netanyahu’s finance minister in a coalition government. Mr. Lapid said that Mr. Netanyahu twice had raised the possibility of extending tax exemptions for Israeli citizens who had returned to the country after living abroad, a mechanism that Mr. Lapid opposed.The extension would have benefited Arnon Milchan, a producer of scores of major Hollywood films including “Fight Club” and “Pretty Woman.” Prosecutors say Mr. Milchan gave Mr. Netanyahu’s family expensive gifts, including cigars and Champagne, in exchange for political favors.According to Mr. Lapid, Mr. Netanyahu twice described the tax exemption as “a good law.” But Mr. Netanyahu did not pursue the matter beyond those two exchanges, Mr. Lapid said. The prime minister gave the impression that he simply wanted to go through the motions of asking about it so that he could tell Mr. Milchan that he had tried, Mr. Lapid added.“The whole issue was marginal in real time,” Mr. Lapid said, according to Kan, the Israeli public broadcaster. “It’s hard to remember all the details.”Mr. Netanyahu has been accused of granting political favors to businessmen and media moguls in exchange for expensive gifts and positive news coverage, charges that he denies.Pool photo by Menahem KahanaThe trial began in 2020 and will most likely not hinge on Mr. Lapid’s evidence: It is expected to last several more years and features several more accusations. Among other claims, prosecutors accuse Mr. Netanyahu of promising to pursue legislation that would create unfavorable business conditions for a newspaper owned by Sheldon Adelson, a billionaire supporter of Mr. Netanyahu and President Donald J. Trump, in exchange for positive coverage from one of the newspaper’s competitors.Many Israelis have tuned out of the day-to-day proceedings, with a large proportion having already made up their minds about Mr. Netanyahu. His supporters view the trial as a trumped-up effort to delegitimize an elected prime minister, while his critics say it should disqualify him from office.But regardless of its outcome, the trial has already caused unusual political instability. It has divided Israeli society almost equally between Mr. Netanyahu’s supporters and critics, making it difficult for either Mr. Netanyahu or opponents like Mr. Lapid to win a stable majority in Parliament. That has caused several successive governments to collapse prematurely, leading to five elections in less than four years.The trial is also at the center of an ongoing dispute about the future of the Israeli judiciary.Mr. Netanyahu’s coalition seeks to overhaul the court system, giving the government greater control over the selection of Supreme Court judges and diminishing the court’s power over Parliament. Mr. Netanyahu says the overhaul is necessary to reduce the influence of unelected judges over elected lawmakers, but his critics fear that the plan will ultimately allow him to end his trial. Mr. Netanyahu denies any such intention.Mr. Lapid’s appearance highlighted the nuances beneath the surface of Israeli politics: Though he now seeks Mr. Netanyahu’s political downfall, Mr. Lapid was once his political ally — and socialized with and briefly worked for Mr. Milchan. Under cross-examination, Mr. Lapid recounted how he interviewed Mr. Milchan in the 1990s, during his previous career as a journalist, and even joined Mr. Milchan’s production company for several months.“We remained friends after that,” Mr. Lapid said, according to Kan. “When he would come to Israel, we would meet for dinners. He is a charming man and I liked him.”But that friendship did not extend to helping Mr. Milchan with his tax, Mr. Lapid said.Gabby Sobelman More

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      As Broadway Struggles, Governor Hochul Proposes Expanded Tax Credit

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      With Omicron complicating Broadway’s return, Gov. Kathy Hochul proposed more assistance for commercial theater, which her budget director called “critical for the economy.”As Broadway continues to reel from the economic effects of the coronavirus pandemic, Gov. Kathy Hochul is proposing to expand and extend a pandemic tax credit intended to help the commercial theater industry rebound.Ms. Hochul on Tuesday proposed budgeting $200 million for the New York City Musical and Theatrical Production Tax Credit, which provides up to $3 million per show to help defray production costs.“They were starting to recover before Omicron, and then, as you have all seen, a lot of these performance venues had to shut down again, and those venues are critical for the economy,” the state budget director, Robert Mujica, told reporters.The tax credit program, which began last year under Gov. Andrew Cuomo, was initially capped at $100 million. Early indications are that interest is high: Nearly three dozen productions have told the state they expect to apply, said Matthew Gorton, a spokesman for Empire State Development, the state’s economic development agency.The Hochul administration decided to seek to expand the tax credit program — and to extend the initial application deadline, from Dec. 31, 2022 to June 30, 2023 — as it became clear that Broadway’s recovery from its lengthy pandemic shutdown would be bumpier than expected.Shows began resuming performances last summer, and many were drawing good audiences — Ms. Hochul visited “Chicago” and “Six” in October, while Mr. Gorton saw “The Lehman Trilogy” and “To Kill a Mockingbird.”But the industry is now struggling after a spike in coronavirus cases prompted multiple cancellations over the ordinarily lucrative holiday season, and then attendance plunged. Last week, 66 percent of Broadway seats were occupied, according to the Broadway League; that’s up from 62 percent the previous week, but down from 95 percent during the comparable week before the pandemic.“Clearly, we’re not out of the woods yet,” said Jeff Daniel, who is the chairman of the Broadway League’s Government Relations Committee, as well as co-chief executive of Broadway Across America, which presents touring shows in regional markets. Mr. Daniel, still recovering from his own recent bout of Covid, welcomed the governor’s proposal, and said the League would work to urge the Legislature to approve it.“Every show we can open drives jobs and economic impact,” said Mr. Daniel, who noted the close economic relationship between Broadway and other businesses, including hotels and restaurants. “If we can maximize Broadway, we maximize tourism.”Under the program, shows can receive tax credits to cover up to 25 percent of many production expenditures, including labor. As a condition of the credit, shows must have a state-approved diversity and arts job training program, and take steps to make their productions accessible to low-income New Yorkers. More