Tax Credits, Deductions and Exemptions

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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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      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

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      Netflix Eyes New Jersey Army Base for Major Production Hub

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      The streaming service said it would bid for a nearly 300-acre chunk of Fort Monmouth and it has the support of Gov. Phil Murphy.Netflix wants to turn a crumbling Army base in New Jersey into one of the largest movie and television production hubs in the Northeast, a plan that has at least one important proponent: Gov. Phil Murphy.On Tuesday, Netflix said it would bid for a 289-acre chunk of Fort Monmouth, about 50 miles south of New York City in the boroughs of Oceanport and Eatontown. The 96-year-old base — used by the United States to develop radar technology and where a civilian engineer, Julius Rosenberg, infamously began his espionage career — was closed by the Pentagon in 2011 as the military cut spending.Bids for the site are due Jan. 12, and Netflix would not discuss the price it planned to offer. The Fort Monmouth Economic Revitalization Authority has appraised the site at $54 million, but several developers previously offered more than $100 million for just 89 acres of the land in consideration. (Those plans fell through.) Netflix said in a statement that it would transform Fort Monmouth into a “state-of-the-art production facility,” indicating a mix of soundstages, postproduction buildings and backlot filming areas.“Governor Murphy and the state’s legislative leaders have created a business environment that’s welcomed film and television production back to the state, and we’re excited to submit our bid,” Netflix’s statement said.At nearly 300 acres, the Jersey Shore site would be Netflix’s second-largest production complex behind ABQ Studios in New Mexico. Netflix bought that complex in 2018 and committed to spend $1 billion in the state, announcing plans in 2020 to expand and invest an additional $1 billion. ABQ Studios will have more than 15 soundstages when complete.Gov. Phil Murphy of New Jersey is offering tax credits for production and studio construction.Al Drago for The New York TimesSpeculation about Netflix’s interest in Fort Monmouth has swirled since July, when The Two River Times reported that Netflix had been in contact with Mr. Murphy’s office about building opportunities.New Jersey officials began playing up their state as economically and politically friendly to Netflix in 2019, when a delegation from Mr. Murphy’s administration visited various Hollywood companies in Los Angeles. In April, Mr. Murphy took a swipe at Georgia, which had just passed a law restricting voter access, leading activists, stars and others to demand that companies like Netflix, Disney and Warner Bros. boycott the state. In a letter to all of the major studios, Mr. Murphy highlighted his incentives for the film and television industry — tax credits on up to 30 percent of eligible production costs, on par with Georgia, and “a subsidy for brick and mortar studio development of up to 40 percent.”“I am incredibly excited to hear about Netflix’s proposed investment,” Mr. Murphy said in a statement on Tuesday. “While there is an objective process that any and all applications will have to go through, this is yet more evidence that the economic plan my administration has laid out is working and bringing high-quality, good-paying jobs to our state.”New Jersey has a long relationship with Hollywood. Thomas Edison started what is considered to be the nation’s first film studio in West Orange in 1893. The state’s political winds, however, have not always been favorable to the entertainment industry.Throughout the 2010s, former governor Chris Christie was so disgusted with MTV’s “Jersey Shore” and its depiction of Jersey residents as binge-drinking blowhards that he made sure the state maintained a hard line on providing tax credits to film and television productions. In 2009, when HBO went to find production space for “Boardwalk Empire,” set in Prohibition-era Atlantic City, the network chose to shoot the series in New York, which has long offered tax breaks. “Only New Jersey’s high taxes can make building a replica boardwalk in Brooklyn cheaper than filming on the real Boardwalk in Atlantic City,” a New Jersey state senator railed.In recent years, production in the state has started ramping back up, in part to meet the content needs of fast-growing streaming services. Netflix alone has filmed more than 30 projects in New Jersey since 2018, including “Army of the Dead,” Zack Snyder’s zombies-in-Vegas extravaganza. Coming up, Apple TV+ will shoot “The Greatest Beer Run Ever,” a movie starring Russell Crowe, Zac Efron and Bill Murray. The CBS drama “The Equalizer” has been among the other shows to tape episodes in the state.The CBS drama “The Equalizer,” starring Queen Latifah, is one of many projects to film in New Jersey recently.Barbara Nitke/CBS Entertainment, via Associated PressA Netflix spokesman said the company would continue to shoot in states like New York, Georgia, Massachusetts, Pennsylvania and North Carolina even if the Fort Monmouth plans come to fruition. Last month, the streaming service opened a new 170,000-square foot studio converted from a former steel factory in the Bushwick neighborhood of Brooklyn. The new studio includes six soundstages and office space.On a recent afternoon outside the Bushwick studio, there were half a dozen crew and craft service trucks, as well as a number of crew members milling in and out of the building. Signage around the studio indicated that two series were already in production: “The Watcher,” a Ryan Murphy-produced limited series starring Naomi Watts and Bobby Cannavale, and “Jigsaw,” a new drama. More