Many states allow spending on out-of-state cast and crew to count towards their tax credit, up to a certain limit. Michigan, for example, which has one of the most liberal policies for out-of-state personnel, will give productions a tax rebate of 40%-42% for above-the-line labor and crew (writers, producers, director, and cast), regardless of where they reside. The state will give 40%-42% for Michigan resident labor and crew, below-the-line, and 30% for non-resident below-the-line. This is up to a salary cap of $2 million dollars per employee per production.

For example, in the Clint Eastwood film, "Gran Torino," which shot in Michigan earlier this year, up to $2 million of Clint's salary would be eligible for a tax credit, even though he will take most of that salary with him back to his home in Carmel, California.
In Missouri, only in-state spending counted towards the tax credit ... until recently. Last summer, the MO Dept. of Economic Development (DED) decided to allow out-of-state cast and crew expenditures to qualify for inclusion in the tax credit. Under the decision, spending on in-state cast and crew (i.e. MO residents) would get a tax credit of up to 35% (actually 32.5%, since MO charges filmmakers an administrative fee of 2.5%). Out-of-state cast and crew spending would be eligible for a 30% (actually 27.5%) tax credit. This is up to a limit of $1,000,000 per person.
So, now, should Clint decide to shoot his next "Dirty Harry" movie in Missouri, the production would get a 27.5% tax credit on up to $1 million of his salary.

Unfortunately, Clint would still be telling Michigan to "make my day" and not MO, because, as you can see, he gets a much better deal in that state, which has a higher tax incentive and a higher cap than we do.

Nevertheless, this bill is a step in the right direction, because it brings MO closer to being competitive with other states, most of which apply the tax credit to out-of-state personnel. It will especially help in St. Louis and Kansas City. In both areas, much of the crew lives across the state line, in Illinois and Kansas. Now, these out-of-state workers will get better employment opportunities in MO-based films, and the local crew members qualifying for the tax credit will be much larger. The only caveat to this is that the out-of-state cast and crew must have MO taxes withheld (which they should be able to reclaim later).

I e-mailed to one LA-based producer to get his take on this development, and unfortunately, he thinks that MO is still behind the other states in this regard. Still, it's a step in the right direction and makes MO at least somewhat more competitive with the other states.

Since this decision was made just recently, and many producers haven't gotten the word yet, it may not have much impact on the dismal production outlook for the rest of this year. We'll have to wait and see how much it will help next year.

 

The MO Film Commission has partnered with the MO Motion Media Association (MOMMA), NetFlix, True/False Film Festival, and "Missouri Life Magazine," for a statewide "Location Scout" photo contest. The purpose of the contest is to generate location photos and beef up the state's location photo database (see article in this issue for more details).

 

The bankers made out like bandits in the now-infamous $700 billion bailout scam ... er ... I mean plan. The taxpayers won't fare so well, but at least those of us in the film industry might benefit a little. Buried in the fine print of the bailout bill, was a bone thrown to filmmakers. According to Cybercast News Service (www.cns.com), the film provision would provide:

"an 'expansion and extension' of a nearly identical provision in a 2004 law .... the revision now allows producers to write off $15 million in production costs on any movie they produce and slashes a restriction in the 2004 law that excluded films with budgets of over $15 million.

"The current legislation would also allow filmmakers filming in the United States to qualify for a tax deduction, capping the top tax rate at 32 percent instead of 35 percent.

"'A taxpayer may elect to treat the cost of any qualified film or television production as an expense which is not chargeable to a capital account. Any cost so treated shall be allowed as a deduction,' states the original tax break, passed in a corporate tax bill in 2004 and extended in the $700 billion economic stabilization package."

The tax benefits to the film and television industry could be nearly $500 million over the next 10 years. Under the "trickle down" theory, perhaps the Missouri film industry will get a smidgen of this largesse.