What's Up With the Tax Credits?

Are The Tax Credits Self-Sustaining?

The first sentence of the statute that brought Louisiana’s Film Tax Credit into existence says that the purpose of the tax credit is to foster a “self-supporting film industry” in Louisiana.

Since 2002 the tax credits have brought many Hollywood productions to Louisiana, earning the state the moniker “Hollywood South.”

Though the tax credits have been successful in making Louisiana an epicenter of film production, critics argue that the program helps the major Hollywood studios more than it does tax-paying Louisianans.

The vast majority of the films being shot in Louisiana come from out of state. Thus, the state’s film industry is far being “self-supporting.”

HB 829, a bill about to be voted on in the State Senate, will re-structure the tax credits to be more focused on fostering a self-sustaining, local film industry.

Here’s a basic breakdown of how the film tax credits have worked up till now, and how HB 829 would make the tax credits for beneficial for local filmmakers.

How Tax Credits Work: 35% of Every Dollar

In Louisiana, filmmakers are given a tax break of 35% of their production budget. They can use that for their own taxes, or they can sell the tax credit to someone with a large tax liability. That means filmmakers can get 35 cents cash in hand or every dollar they spend making their film in the state.

The Budget Cap: $300,000

Up until now, only films with budgets $300,000 or higher are eligible to take advantage of the tax credit.

Most aspiring local filmmakers like me do not have the resources to make a film for $300,000. Most of us are cutting our teeth on short films or maybe our first feature, and we don’t have access to that type of money—yet (we’ll get there soon, we just need a little practice).

For Hollywood on the other hand, $300,000 is chump change.

HB 829: Sherri Mac Saves the Day

Sherri McConnell is my hero. From the local, indie filmmaker’s perspective, she’s a champion of the Film Tax Credit for all the right reasons.

Here’s how HB 829 will foster local filmmaking:

Budget Cap: $50,000 for Local Filmmakers

Local filmmakers will now be able to take advantage of the tax credits for films with budgets of $50,000 (instead of $300,000, which it has been up until now).

The lowering of the budget cap will make the tax credits vastly more useful for local, indie filmmakers working with limited budgets.

45% Tax Credit for Locals filmmaker

If you’re a local and you own the copywrite of your script, and if your director and 75% of your crew are Louisiana residents, HB 829 will make you eligible for a 45% tax credit.

For we aspiring filmmakers who are looking to fund our first feature film or our next short film, being able to tell investors that they get a 45% tax write-off will be massively helpful.

Aggregating or Slating Feature Film

HB 829 will also allow local producers to aggregate multiple projects under the $300,000 budget cap.

Say me and my production company want to make a feature film and two other short films (or maybe a commercial or music video for a client) we can now combine the budgets for those films to meet the $300,000 threshold.

The $200 Million Cap and Resistence From Hollywood

There has been a lot of doom and dread in the film community lately, because lawmakers want to cap the amount the state gives to the film industry. The cap would be $200 Million a year.

Many of the dudes I talk to who work on Hollywood sets are nervous, because they think this cap is going to drive Hollywood out of Louisiana.

But one of the cool aspects of the cap, Sherri Mac told me, is that 15% of the $200 Million will be reserved for the “home-grown” films that are defined in HB 829.

So though the cap might be a bad thing for Hollywood, as a Louisianan filmmaker, I think it’s a pretty good idea. As a tax payer, I think that it’s good to put a limit on how much money he hand out to the film industry. As a local, indie filmmaker planning my first feature, I think it’s wonderful that the state is allocating a certain amount of money to help foster local film talent.

We Lose the Tax Credit, We Lose the Film Industry?

Since I moved to New Orleans in 2009, there has been a looming threat that the state will cut the tax credit.

People have argued that if we lose the tax credit, we’ll lose the film industry we’ve cultivated.

But if the stated purpose of the tax credit is to create a self-sustaining film industry, then ultimately we shouldn’t need the tax credit in order for the film industry to sustain itself, right?

I’m certainly not saying that I think the tax credit should be cut, but I think it’s a great idea to re-structure the tax credits to encourage the creation of Louisiana-made movies.

In ten years, local films should be the backbone of Louisiana’s film industry—not Hollywood South.

HB 829 is a great first step toward accomplishing that goal.

Here's a video of the full converstaion we had with Sherri McConnell: