Hollywood’s new role may be as the world capital for film entertainment in name only, unless California can compete with other states in tax incentives, industry watchers say.
FilmL.A. Inc., the nonprofit film office of the city and county of Los Angeles, has partnered with Warner Bros. Entertainment, unions and others through a campaign called Film Works to petition California legislators to make it more affordable, through tax credits, for production companies to shoot their movies within state lines.
“An inhospitable business climate is driving the movie business, the entertainment business, out of California into neighboring states,” Tucker Carlson, editor in chief of The Daily Caller, told Fox News.
State Assembly members Mike Gatto and Raul Bocanegra, both Democrats, introduced a bill to expand the types of film and TV productions that qualify for the state’s existing $100 million tax credit program, passed in 2009.
That may not be enough, however, to compete with generous tax credits offered in other states. The Association of Film Commissioners International Location Expo in Los Angeles attracted representatives from 23 states and 35 countries. Louisiana advertised subsidies for 30 percent to 35 percent of “ALL production costs, which includes ‘below-the-line costs’ for off-screen labor and ‘above-the-line costs’ for things like star salaries.”
Five of the six highest-grossing, non-animated movies in 2013 shot scenes in California. The state contributed locations to “Iron Man 3,” “The Hunger Games: Catching Fire,” “Fast & Furious 6,” “ Man of Steel” and “Thor: The Dark World” . Four of the five movies with the biggest budgets also shot scenes in California: “Avatar” (2009), “Pirates of the Caribbean: At World’s End” (2007), “The Dark Knight Rises” (2012) and “The Lone Ranger (2013).”
“Iron Man 3,” the highest-grossing movie last year, appears to take place largely in Los Angeles. In reality, only short scenes were shot on location to make it look that way. Most of the production actually took place in Wilmington, N.C., which boasts the largest movie facility in the United States outside California.
North Carolina offers a 25 percent refundable tax credit to qualifying productions that began within tax year 2011, capped at $20 million. Marvel Studios received the $20 million tax credit for “Iron Man 3” and left with a desire to return. The state reaped $104.1 million in labor income, among other economic benefits.
So why did Marvel work to make viewers think Iron Man’s alter ego, billionaire industrialist Tony Stark, resided in Malibu when in reality actor Robert Downey Jr. was hanging Stark’s helmet in Wilmington? FilmL.A. Inc. concludes: “On a level playing field, [other states] can’t compete with California. Indeed, no one can.”
This story was produced by The Foundry’s news team. Nothing here should be construed as necessarily reflecting the views of The Heritage Foundation.