Washington, D.C. - Champions of the entertainment community, California Congressmen Howard Berman and David Dreier introduced legislation today encouraging American film and television productions to remain in the U.S. and halt runaway productions.
 
With foreign countries amending their tax codes and providing generous incentives for film productions to relocate outside of the United States, this legislation aims to reverse this growing and disturbing trend by incentivizing American productions to remain at home.

The legislation provides a two-year tax extension to encourage entertainment production to remain in the United States. The current tax incentive provision, known as Section 181 first passed in the American Jobs Creation Act of 2004, was amended in 2008, and later extended through 2011. This legislation would apply to productions after Dec. 31, 2011 through 2013. 

“We must make every effort to keep American productions here in the United States,” said U.S. Rep. Howard Berman. “Entertainment jobs support middle class families in the San Fernando Valley, throughout Los Angeles, and across the nation, and should not be exported abroad.”

“Jobs are our number one priority and this bill will help more people find good jobs in California and across the U.S.,” said U.S. Rep. David Dreier. “We need to create an environment that will keep entertainment productions here so that caterers, makeup artists, and other small businesses that support them can create jobs too. This is a common sense bill that deserves bipartisan support.”

With production of films and TV programs occurring throughout the United States, this industry creates well-paying jobs and generates tangible economic benefits to cities and states nationwide.  A typical motion picture employs 350-500 people.  Production jobs have an average salary that is 73% higher than the current nationwide standard.  A major motion picture shooting on location contributes $225,000 on average every day to the local economy, so it is no surprise that it is seen as a critical engine of economic development in many places across the country.

Background Information

The History of Section 181

In response to a growing number of foreign countries implementing policies to attract American productions, Congress included provisions, known as Section 181, in the Conference Report to the American Jobs Creation Act of 2004, P.L. 108-357 (JOBS).  The provision was amended in 2008 to further encourage production to remain in the United States and renewed as part of the tax extenders packages included in the Emergency Economic Stabilization Act, P.L. 110-343 and then again in 2010 in the Tax Relief Unemployment Reauthorization and Job Creation Act, P.L. 111-312.

Importance of Section 181

Section 181 was originally created by the JOBS Act with strong support from Berman and Dreier.  The provision is a modest, yet important tool to help ensure that feature film and television productions remain in the United States.  Section 181 helps to counteract the foreign incentives by lowering the cost of capital for domestic production by providing immediate expensing on the first $15 million of film production costs.  To be eligible, 75% of the production must occur in the United States. 

Additionally, the film industry has been excluded from general provisions to increase business investment in this country, including bonus depreciation measures which cover virtually every other American industry.  In recent years, one factor justifying the discriminatory treatment of film investment under the bonus depreciation provision was the existence of Section 181.  To end this vital provision at a time when other industries still receive far greater incentives for capital investment would not only be unfair, it would hasten migration of film and television production overseas.  This industry, which is such an important economic engine for many cities and states, should not be singled out for a tax increase.

Extending Section 181 will continue to promote capital investment and production in the United States.  This will not only help to promote well-paying film industry jobs, but will also have a ripple effect across broad sectors of the economy by generating revenue and employment opportunities for a wide range of local businesses, such as caterers, dry cleaners, lodging, equipment rental facilities, transportation vendors, and many others.

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