Federal tax credit could double US production to $38bn by 2035 – MPA
The introduction of a federal tax credit in the US could double production spending in America by 2035, according to a new study commissioned by the Motion Picture Association (MPA).
The study, which was conducted by consultancy first Olsberg SPI, presents two scenarios: one in which the status quo remains and another where a federal incentive is introduced on January 1, 2027.
The report’s projections are based on the assumption that the incentive is a 20% tax credit on eligible labour, plus an additional 5% for shooting in rural areas and a further 5% for independently produced projects.
The study projects annual production volume would rise to US$38.7bn by 2035 if a nationwide tax credit came into force. In the absence of one, yearly production volume is projected to be US$16.6bn in 2035, down from US$17bn in 2027.
Between 2027 and 2035, the existence of a federal incentive would result in an additional US$125.3bn in American production volume, according to the study. According to the report, production spending would climb to US$19.8bn in 2027, US$22.9 in 2028, US$34.7bn by 2032 and up to US$38.7bn by 2035.
With the introduction of the incentive, total US-based production spend from 2027 to 2035 would be US$277.5bn. Without it, the total will be US$152.bn, claimed the report. By 2035, the tax credit would have supported the creation of 143,500 new full-time jobs and generated US$133.1bn in total labour income, it added.
It also sought to communicate the cultural impact of a potential production uptick, referencing a report claiming viewers of ‘made in US’ content were 1.8 times more interested in travelling to the US than non-viewers.
As of August, there are 39 incentive programmes operating at the state level in the US, says Olsberg SPI. However, the absence of a tax credit at the national level has been a consistent frustration for the US production sector, especially as runaway production has accelerated over the past two decades, with the likes of Canada, the UK, Australia and various other European countries luring American projects away with generous incentive programmes.
The release of the report comes as momentum continues to gather behind a federal tax credit for TV and film in the US.
In late August, US president Donald Trump called on Republicans and Democrats to fast-track a bipartisan bill that would see the establishment of a national incentive.
Exact details of the bill, which is tentatively titled The Motion Picture, Television, and Entertainment Revitalization Act, have not been revealed yet. But it is believed it will be a 20% rebate on eligible labour, in addition to an extra 5% for filming in rural locations, and can be stacked with state-specific incentives. The bill has not formally been introduced in US Congress but talks are currently underway.
If a federal tax credit were to come to fruition, it would be a major boon for the American production sector and likely a concern for countries like Canada, Australia and the UK, where billions of dollars are spent every year by US productions.
However, it remains to be seen whether a 20% federal incentive would make shooting in the US cheaper than abroad, or how it might change the calculus for American productions. In addition, this MPA-commissioned report presents a very favourable outcome, whereas other analyses might not give such optimistic projections.
The MPA, led by chairman and CEO Charles Rivkin, has been a strong supporter of the bill. Shortly after Trump threw his weight behind the incentive, the MPA put out a statement saying: “A federal incentive would be a landmark step toward bringing more production to local communities in all 50 states, strengthening our nation’s economy, and making our country a more competitive place to produce, create, and tell great stories.
“We applaud President Trump’s support for this vital action, and we look forward to continuing to work with the White House and bipartisan leaders in Congress to enact a meaningful and effective national incentive into law.”
