A California legislator is seeking to exempt the state’s film and TV tax credits from a $5 million cap. The cap, part of the state budget, could make California noncompetitive with other states. Assemblymember Rick Chavez Zbur, D-Hollywood, authored a letter to Gov. Gavin Newsom and legislative leaders calling for the exemption.
Background
The $350 billion state budget includes a $5 million cap on tax credits per project. This cap would reduce tax credits for larger productions, making California less competitive with other states that offer larger tax credits. Zbur believes the cap was unintended and was included in the budget as part of a larger group of business tax write-offs.
Zbur’s letter has been signed by 39 legislators, and discussions have taken place in both houses of the Legislature. The legislator hopes to make discussions and amendments to the tax credit cap a priority before the legislative session ends in late August.
The California Film and TV Tax Credit program has been effective in bringing movie and TV productions back to the state. Last year, Gov. Newsom more than doubled the program from $330 million to $750 million. However, the new cap could undermine this progress and lead to a loss of jobs and productions in the state.
Impact on the Industry
The tax credit cap would have a significant impact on the film and TV industry in California. Larger productions would experience significant decreases in tax credits, making it harder for them to compete with other states. Zbur cited lucrative tax credit programs in other states, such as Georgia and New Jersey, as a reason why productions may leave California.
A movie with $100 million in qualified expenses currently earns a $35 million tax credit. However, under the state budget’s tax credits cap, the maximum credit would be $5 million. This means producers would have to take more time and other routes to get the remaining $30 million, making the program noncompetitive with other states.
Original reporting: KTBS 3 (Shreveport) — read the source article.
