AN INDEPENDENT PRODUCER'S LEGISLATIVE WISH LIST FOR THE MO PRODUCTION TAX CREDIT
by Mike Ketcher
This article is the sole opinion of the author, and does not reflect the viewpoints or the opinions of the St. Louis Chapter of the MCA-i. All comments or responses should be directed to the author at michael_ketcher@yahoo.com.
The Missouri production industry is moving into full lobbying mode
to push for a higher cap for the production tax credit. Here is my wish list for some new changes to the production tax credit that we may consider.
Just about everyone agrees that we need a higher cap. Film Commissioner Jerry Jones says that to create enough production to build the industry and spur infrastruction development, we need $30 million annually, a far cry from the current $4.5 million. Missouri has the lowest cap in the country, and a higher cap would bring more films here. However, there are also other possible changes we should consider, besides a higher cap.
First, a higher percentage would be nice. Missouri used to be tops in the country at 50%. A return to 50% would put us on top of all the other states in this category. I doubt that this will happen, because all of the focus is on raising the cap. But if it did, it would allow MO to stand out in the pack, once again. It would be a great selling point for Missouri, just as it was once upon a time.
Second, and perhaps more important, would be to follow what Iowa has done and to provide an investor tax credit to those investing in films produced in Missouri. As far as I know, Iowa is the only state to have an investor tax credit. Such a tax credit would be a big help to independent filmmakers, both in-state and out-of-state.
Raising money for films is always a challenge for filmmakers. The economic downturn has made it even more challenging, as many large investors have less discretionary funds to invest in high-risk ventures like film. Even those that have the funds are being cautious. An investment tax credit provides producers with an great incentive to offer investors in their film. A 25% tax credit, as Iowa has, would help lower the risk of investing in films -- and make MO far more competitive with all those other states. It would be a way to guarantee
that film investors get a partial payback for investing in a high-risk venture. Perhaps the law could be written in such a way that it would apply not only to individual productions, but to infrastructure development, like building new soundstages in Missouri.
Third, I'd like to see some "Support Your Local Filmmaker Legislation;" in other words a law that would require the state to provide at least a portion of the tax credit to in-state filmmakers. There are many in-state producers, not only in Kansas City and St. Louis, but in Columbia, Springfield, and Cape Girardeau who are capable of making films large enough to get a tax credit. Let's make sure our local producers get a piece of the action. This includes not only big in-state producers, like Hallmark in Kansas City, which rarely, if ever, produces any of its television shows in Missouri; but smaller producers who are making films, television shows, commercials, and documentaries.
By supporting our in-state producers, we help prevent "runaway productions," i.e. those productions that may go to other states to produce their films, if they can't get a tax credit here. What's more, in-state filmmakers will pay taxes on profits they make to the state of Missouri; out-of-state filmmakers will pay taxes on the profits of their films to other states. For example, the hugely-successful "Up In The Air" will pay taxes on its profits to the state of California.
Legislators often complain that film tax credits are a "subsidy to Hollywood moguls." They complain that the state loses revenue by supporting these Hollywood productions. I believe that these claims are false, and can't be supported by the facts. However, by making sure that local producers get a portion of the goodies, we steal a lot of the thunder from the critics of the production tax credit. They can no longer claim that only "Hollywood moguls" benefit from the state film tax credit.
Of course, some in-state filmmakers have gotten tax credits. But these amounts are generally small. At the most recent MO Film Commission meeting, it was revealed that Hallmark would have made their Christmas special in Missouri last year, had tax credits been available. We need a state law that will insure that in-state producers, of all sizes -- televeision, commercial, and film -- get their fair share. Many producers in Missouri are now capable of making films in the range of $100,000 to $1 million. The state of Missouri should guarantee a significant amount of the tax credit (let's say 10% to start with) to smaller in-state producers. This could grow as more-and-more in-state producers become experienced enough to produce larger films.
Fourth, include industrials and video games in the tax incentive legislation. Many states don't include these -- and at this time neither does Missouri. However, video games are a huge industry and by encouraging video game production, we help actors, animators, writers, computer programmers, and many others in our industry.
Traditionally, industrials (productions that are not intended for theatrical release or broadcast, such as corporate videos and training films) haven't received tax credits. However, this may be a mistake. With the loss of corporate headquarters in both St. Louis and Kansas City, much of the industrial production here has dried up. In addition, many companies are outsourcing their marketing videos and training videos.
I recently worked on a project in which a large computer company, based in Los Angeles, hired a St. Louis company to produce a series of training modules for its sales staff. Previously, the company had done its training videos in-house, but wasn't entirely happy with the results, so they outsourced it. We could attract more out-of-town jobs like this if we had a tax incentive to offer out-of-town companies to come here and produce their corporate videos.
It's often been an uphill battle to get new production tax incentive legislation passed in Missouri. We may have a better chance of it by coming up with some innovative legislative proposals that would catch the attention of producers both in-state and out-of-state.
LETTER