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October 1, 2014IM -
Legislation was introduced today in the US Congress to amend Section 181 of the US tax code that would disqualify producers from obtaining taxpayer money to subsidize their films, if US jobs are offshored. Section 181 is currently worth $400 million in yearly subsidies to the motion picture industry.
H.R 5497, the Film Incentive Reform Act of 2014, sponsored by Congressman Collin Peterson (D-MN), and supported by the AFM, would close a loophole in current law that qualifies a film for subsidies if only 75% of a film’s production is spent in the US. The AFM has estimated that musicians lose $30 million in salaries each year through offshoring of TV and film music soundtrack jobs.
“There is no justification for Congress to provide corporate welfare to the US film industry when producers take taxpayer money and offshore US jobs,” says AFM President Ray Hair. “Film tax incentive provisions were originally intended to encourage domestic motion picture production, but in the case of musicians who record the film and TV scores, the producers are hurting us.”
“Current tax loopholes put hard-working musicians, whose names might not be well-known, but who work hard for minimum pay because they love music, at a disadvantage,” Congressman Petersen says. The Film Incentive Reform Act of 2014 would close this loophole, ending the tax break to companies that send American jobs offshore. This legislation will save taxpayer money and keep more jobs in the United States.”
In 2004, the AFM, in coalition with other entertainment unions and producers, successfully lobbied Congress to include Section 181 in the American Job creation Act of 2004, which outlines “Treatment of Certain Qualified Film and Television Production” for the purposes of providing tax subsidies to domestic film production activities produced in the US.
Nearly a decade later, Section 181 tax credits provide more than $400 million each year for US film producers. Peterson’s legislation would modify the law to require a subsidized film production to spend 100% of its production costs in the US, effectively keeping taxpayer money at home.