Senate Passes JOBS Act, Moves to Help Grow U.S. Entertainment Industry

After nearly a year of behind-the-scenes lobbying, the Senate passed a bill on May 11 that would offer a handful of tax benefits to Hollywood.

The Jumpstart Our Business Strength, or JOBS Act, includes a tax incentive for studios to film in the U.S. instead of going overseas. The IATSE, the DGA, SAG and other Hollywood unions have been working for years to secure such an incentive.

On June 17, the House approved companion bill H.R. 4520, the American Jobs Creation Act, with a bipartisan vote of 251 - 178 without fully signing off on the provisions designed to benefit the entertainment industry. IA lobbyists say the bill now heads into conference committee where parameters of the tax breaks for filmmakers will be hammered out.

"Hollywood is a uniquely American industry," said an IATSE official. "State and federal tax incentive efforts are crucial in leveling the playing field and keeping these jobs in the U.S. where they belong."

The MPAA also convinced the Senate to include language fixing a long-running dispute with the IRS over how Hollywood studios write off the depreciation of films and TV shows. At the last-minute, senators also tacked on a 50 percent tax credit to offset the cost of creating closed captioning for movies.

The overarching legislation - which overwhelmingly passed the Senate 92-5 - proposes income tax breaks for U.S. manufacturers in exchange for giving up an export subsidy that the World Trade Organization has deemed illegal.

Because of that ruling, the European Union levied tariffs on most U.S. exports effective March 1. Those tariffs are set to increase 1 percent per month until 2005. While some tax analysts estimate the JOBS Act could cost the entertainment industry millions in tariffs, others disagree. The potential cost is the source of renewed lobbying efforts from the IATSE and other Hollywood labor unions.

California's Democratic Sens. Barbara Boxer and Dianne Feinstein failed to win support for an amendment that would exempt Hollywood from the new financial burden entirely. Lobbyists believe that provision will be made part of the final bill when the House and Senate sort out their differences. The House is expected to complete work on the measure and send it to President Bush before November.

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