Governor Wants to Revive Tax Credit for Movie Production To Help Prevent Runaway Production

Governor Arnold Schwarzenegger (R) said he is working with a group of Legislators on a bill that would provide the motion picture industry with tax credits for productions in California in an attempt to prevent producers from filming movies out of state.

According to a San Jose Mercury News article, the Governor mentioned the bill at the Sacramento premier of “Be Cool,” which was filmed entirely in state. “It is extremely important that we continue supporting our motion picture industry and that we, as a state, do everything that we can,” Schwarzenegger said.

None of the bill’s specific details have been released. In 2002, then-Assembly Speaker Herb Wesson (D) pushed a film tax credit bill, AB 2747 (Wesson), through the Assembly but the bill stalled in the Senate. The bill was supported by then-Governor Gray Davis as well.

AB 2747 proposed to provide movie producers with a 15% credit against income or corporate taxes for the first $25,000 in wages paid to workers for film productions (75% of the wages paid were required to be for work performed in California). It was intended to pay a percentage of wages for low-end workers, and could be transferred among companies because of the many complexities about how movie productions are organized.

Supporters emphasize the issue of “runaway production”, particularly to Canada and other countries. Opponents argue that the tax credit will make no difference, and will be a substantial drain on the general fund. Previous legislation was estimated to cost over $100 million per year.

--David Kersten, California Tax Reform Association

[return to top]