There's no business like show business -- and New York has the preferential tax laws to prove it.
On Tuesday, Gov. Andrew Cuomo approved yet another expansion to the state's already robust incentive program for film and television production, signing legislation that sweetens the deal for filmmakers who do post-production work in the Empire State.
The law, which takes effect immediately, increases tax credits from 10 to 30 percent for qualifying productions that do post production -- which includes editing, visual effects, color correction and sound mixing -- in New York City and its surrounding counties. An additional 5 percent credit -- for a total of 35 percent -- will be given elsewhere in the state.
Supporters of the new law say it provides much-needed relief to a sector of the production industry that has not benefited from existing tax credits as greatly as above-the-line talent and production crews have. According to the Cuomo administration, only 19 of the 727 tax-credit applications received by the state last year involved post-production work.
"With this legislation, New York is inviting producers, directors and editors from across the nation to bring their post-production work right here," the governor said in a statement.
New York's tax-incentive program is immensely popular, enjoying widespread bipartisan support among legislators and championed by the entertainment industry as a proven creator of jobs. And raw numbers would seem to agree: According to the governor's press office, film and TV producers have spent more than $7 billion in New York since the state began offering tax credits to support the film and television industry in 2004.
The program is not without its critics, however. Some say film tax incentives are nothing more than corporate welfare for movie studios, which are given special deals in return for the perceived glamour their industry brings to the state. The Tax Foundation, a nonpartisan research group based in Washington, D.C., has been among the most vocal critics of film tax incentives. In April, the foundation put out a report on the effects that statewide tax-incentive programs have on their respective economies. Authored by researchers I. Harry David and Mark Robyn, the report found that tax credits actually cost states revenue, which then necessitates either higher taxes or lower spending elsewhere.
"Oftentimes movies that take advantage of tax incentives would have located in that state already," said Elizabeth Malm, a research assistant for the Tax Foundation's State Policy Team. "If this is the case, the government hasn't lured the production company into the state. It has just lessened the cost -- and foregone revenue -- for a firm that would have already done business there anyway."
State Sen. John DeFrancisco, who sponsored New York's newest legislation, could not be reached for comment. However, statistics from both the state and city film commissions show a marked rise in New York-based production since tax incentives were first implemented. At a May press conference on the soundstage of "Saturday Night Live" at 30 Rockefeller Center, Mayor Bloomberg said that film and TV production had reached an all-time high 2011, with 13 pilots, 188 films and 140 television series shooting in the Big Apple. Those statistics came from an economic impact study conducted by the Boston Consulting Group. That translates, the mayor said, into 30,000 new jobs for an industry that employs about 130,000 people.
Film tax incentives have exploded all around the country over the last decade as states have tried to compete for producers' business. According to the Tax Foundation, the number of states that offer film tax incentives peaked in 2010 at 40 -- up from only three in 2000. Critics say that increased competition spurs states to take a loss on larger and larger tax credits, while producers flee from one state to the next in a game of musical chairs with no intention of laying down roots in one particular state.
"In order to convince film production companies to do business within their borders, states must offer incentives that are more enticing than their competitors," Malm said. "This can create a 'race to the bottom' where the costs to the state -- in terms of increasing incentives offered -- spiral upward."
Nevertheless, given the tax-incentive program's enormous support, state lawmakers are not likely to abandon it any time soon, and the latest expansion will only increase its popularity among below-the-line workers in need of a gig. Marcelo Gandola, president of the Post New York Alliance, a trade association for the post-production industry, said in a statement that her organization looks forward to "hiring more people immediately to meet increased demand for services."
Editors take note: make sure your Final Cut Pro is up to date.
Christopher Zara covers media, culture, entertainment and the arts. He joined IBTimes in June 2012. From 2005 to 2012, he served as managing editor of Show Business, a trade...