Opinion: California tax credits needed to keep the Hollywood dream alive
Once upon a time, Hollywood wasn’t just a neighborhood. It was the beating heart of film and television production in North America. But over the last two decades, the bright lights of Los Angeles have dimmed.
It’s not for lack of talent or vision, but because other cities and countries seized an opportunity and offered better tax incentives to lure the industry away.
This exodus has hit California hard. Over the past few decades, Southern California lost thousands of production jobs. These are middle-class workers: set builders, costume designers, grips, gaffers, editors, caterers, drivers, camera operators and more. These are Californians who pay state income taxes, send their kids to local schools and spend their money at local businesses.
They represent the backbone of this industry and we let them slip away. California can’t risk losing what we’ve worked for a century to build.
Much has been said about Gov. Gavin Newsom’s proposal to increase the California Film & Television Tax Credit Program to $750 million annually — and it is absolutely necessary. But we also need the changes that have been proposed in Assembly Bill 1138 and Senate Bill 630. Namely increasing the credit to 35% of expenses to more competitively align with other states.
Additionally, qualifying half-hour comedies is an important addition. Comedies that were once primarily sitcoms shot on Hollywood sound stages are now more likely to be shot single-camera style, similar to movies and dramas. They can be set up to shoot in locations with favorable tax credits.
Case in point: when I was still at Sony Pictures TV, we shot “Cobra Kai” in suburban Atlanta — due in large part to Georgia’s production incentives qualifying half-hour comedies. Ironically, the reboot TV series was inspired by the 1984 feature film “The Karate Kid,” which was creatively set in the San Fernando Valley.
California must go further. Although the issue of including above-the-line cost is somewhat controversial, some version is necessary to compete with states that offer it. A potential solution is to qualify only the scale portion of fees paid to above-the-line talent. This would solve the concern that a few highly paid performers would allow a production to get an outsized amount from the tax credit fund.
It also aligns much more closely with the primary intent of the fund: to qualify basic, scale-wage workers.
Every show that shoots in California supports hundreds of jobs. It pumps money into local economies from lumber yards to restaurants, from car rentals to dry cleaners. This is why other places created tax credit programs of their own. They recognize that production spending is good economic development policy, generating a return on investment many times the amount of the credit. In Los Angeles, every dollar of film and television tax credit allocated generates $1.07 in state and local tax revenue and raises local wages by $8.60.
Our crews have weathered a lot in recent years: a pandemic, two major strikes, a steep industry contraction and now the recent L.A. fires. They are eager for consistent, sustainable work.
My wife and I moved to California in 1979 to work in this business. We built a life, a family and a future here. I want that opportunity to remain for the next generation of Californians. No one should have to leave California in pursuit of the Hollywood dream.