RUNAWAY PRODUCTION BULLETIN:
U.S. Senate Bill seeks to level playing field in global marketplace
National Executive Director Jay D. Roth (left)
and DGA President Jack Shea greet
Senator Blanche Lambert Lincoln at the DGA.
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In a strong show of bipartisan cooperation in the Senate, legislation attempting to stem the tide of runaway production was introduced recently by Senator Blanche Lambert Lincoln (D-Ark.) and co-sponsor Senators John Breaux (D-La.), Richard Durbin (D-Ill.), Mary Landrieu (D-La.), Rick Santorum (R-Pa.) and Olympia Snowe (R-Maine).
If enacted, the U.S. Independent Film and Television Production Incentive Act of 2001 (Senate Bill No. 1278) would create a targeted wage and tax credit for low budget productions filmed in the United States.
Sen. Lincoln's legislation is strongly supported by the Directors Guild of America, a leading force in a broad alliance of producers, small businesses, guilds and unions representing hundreds of thousands of working people and thousands of small voices. (See sidebar )
About the pending legislation, DGA President Jack Shea said, "The DGA and the Industry Alliance are deeply grateful to Senator Lincoln and her co-sponsors for seeking to help the American motion picture industry compete in the international marketplace on a level playing field."
The targeted wage and tax credit would apply to production of films, television or cable programming, mini-series, episodic television and movies of the week produced in the United States with total wage costs between $200,000 and $10 million. In most cases, the wage and tax credit would be 25% of the first $25,000 in qualified wages per employee. Additionally, in low-income areas that qualify under the existing "new markets" tax initiatives, the credit would be 35%.
The bill is a direct response to the tax advantages that have increasingly lured productions across the U.S. borders, primarily to Canada.
These alarming ripple effects to the U.S. film industry, small businesses and local, state and federal governments were detailed in the June 1999 DGA and SAG Monitor Report. The report showed that runaway production had cost U.S. entertainment industry workers more than 60,000 full-time equivalent positions in the prior three years alone. More than $3 billion in goods and services had been lost in support industries such as hotel, real estate, medical, restaurant and other retail trade. An additional $1.9 billion had been lost in payroll, income and sales taxes. (A complete copy of the report may be found at www.dga.org/thedga/leg_rp_runaway.pdf)
Following the release of this report, the DGA began formulating a legislative approach. The DGA's commitment to finding legislative solutions involved retaining two prominent Washington, D.C. lobbying firms whose number one priority has been the issue of runaway production. DGA lobbyists have years of combined congressional and federal government experience with backgrounds such as: former Special Assistant to President Clinton for Legislative Affairs, Senior Floor Assistant for then Senate Majority Leader Robert Byrd, Senior Floor Assistant for former House Speaker Newt Gingrich, Chief of Staff to Senator Assistant Majority Leader Don Nickles, Chief Minority Tax Counsel to the Senate Finance Committee, Legislative Counsel to former Senate Majority Leader George Mitchell, Senior Tax Advisor at the Department of Treasury during both Bush, Sr. and Clinton Administrations, and Legislative Counsel to the Joint Committee on Taxation.
The DGA soon became part of an alliance of organizations representing a full cross section of the entertainment industry, film commissions and mayors, all of whom brought their own firsthand perspective to what runaway production was doing to the U.S. economy and the film industry.
As part of the legislative process, the DGA and other Alliance partners began meeting with members of Congress. This resulted in a bipartisan group of U.S. House of Representatives members — Howard Berman (D-Calif.), Mark Foley (R-Fla.), Robert Matsui (D-Calif.), Jerry Weller (R-Ill.) and Xavier Becerra (D-Calif.) — requesting that the U.S. Commerce Department make its own assessment of the effects of runaway production across the country.
The Commerce Department's report, released in January 2001, raised alarms similar to the DGA and SAG Monitor Report. The Commerce Department determined that the overall yearly economic loss to the U.S. film industry, support industries, as well as payroll, income and sales taxes may be as high as $10 billion per year. (A complete copy of the Commerce Department's report may be found at www.dga.org/dga_members/forms/DOCPRESS.pdf)
These reports gave hard data to a unique bipartisan group of senators from across America who had themselves witnessed substantial drops in their states' economies as the number of productions shot there began to drop noticeably.
These senators that, having witnessed substantial economic loss, were anxious to address the problem, believed S. 1278 to be the vehicle to make America competitive in a global marketplace.
S. 1278 is a major achievement for a united effort to give the United States equal footing with foreign countries seeking these production dollars. But getting this bill enacted into law will require a considerable effort as wage-based tax credits are rarely granted by Congress. "The DGA has been clear with our members that this is going to be a hard, difficult fight," said DGA National Executive Director Jay D. Roth. "Notwithstanding, we are committing considerable time, money and resources to S. 1278. We believe, along with the Alliance, this wage and tax credit is the way to bring jobs back to the U.S."
In the U.S. House of Representatives, the DGA, along with the Alliance, has been working closely over the last two years with a bi-partisan group of supporters including Congressmen Becerra, Berman, Foley, Matsui and Weller. The House Ways and Means Committee is vital to passage of any tax-related legislation. Chairman Bill Thomas, who represents Bakersfield, California, is well aware of the economic impact of film productions shot in his district.
If you have questions or need information about Runaway Production please call the DGA Runaway Production Hotline: 310-289-2073
or email: runaway@dga.org
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