In the battle to lure big-budget Broadway shows, tax credits are cities' new ammo

J. Kelly Nestruck, The Globe and Mail [Canada], 1/30/12 [hat tip to Howard Sherman]

A new front has opened in the long-standing battle between Toronto and Chicago for the title of North America's second theatre city: tax credits. An act passed by the Illinois Legislature quietly over the holidays has essentially launched the opening shot... In an effort to lure prestigious, big-budget productions such as these away from cities like Toronto to Chicago - and, particularly, the employment, tourism and hundreds of millions of dollars in economic spinoffs they bring - Illinois's new Live Theater Production Tax Credit will offer a tax rebate up to $2 million (U.S.) for commercial producers of "pre-Broadway and long-run shows" beginning in July. The threat of losing in-demand shows to American competitors has motivated Toronto rivals Dancap and Mirvish Productions to put their differences aside and join forces with unions and associations to figure out how to lobby for a similar incentive either at the federal or provincial level. Producer David Mirvish [said], "If you lose one large, long-playing show, you're going to take $600 to $800 million out of the economy of Toronto." Provinces and states - as well as Canada's federal government - have long offered tax deals to entice film producers to shoot (and spend) within their borders, but similar programs to attract commercial theatre productions are a relatively new phenomenon. In 2009, in a bid to help its cultural industries recover after Hurricane Katrina, Louisiana launched a tax credit of 35% on live performances that originate in the state to a maximum of $10-million a project. Even though New Orleans competes for fewer productions with Toronto than Chicago, reverberations from the Louisiana bill have already been felt here. In September, The Addams Family was the first Broadway musical to launch its national tour in New Orleans instead of, among other possible cities, Toronto, home of show investor Dancap. While local audiences weren't short-changed by that decision - Torontonians got to see The Addams Family tour a couple months later - the economic spinoffs to the city were less pronounced. Originating the tour meant that cast and crew spent a month or more in New Orleans and an estimated $4 million (U.S.) building and rehearsing the show.

Commentary: To end online piracy, offer tax credits to supporters of creative work

Dean Baker of the Centre for Economic Policy Research, Huffington Post, 1/23/12

The popular rebellion against the Stop Online Piracy Act (SOPA) was impressive. While this revolt against the entertainment industry's effort to rein in the web was inspiring, there is a real issue at stake. It is getting ever harder for creative workers to get paid for their work. This is seen most clearly in the music industry. Sales of recorded music in the United States dropped from $14.6 billion in 1999 to $7.7 billion last year. If sales had kept pace with inflation and the growth of the economy they would be over $23 billion today. Furthermore, the overwhelming majority of this money stems from the work of a small number of performers who are promoted by the major entertainment companies. The vast majority of singers and musicians get almost nothing from copyright protection. However the answer to this problem can't be the SOPA route of closing off the web. The more obvious route is to develop alternatives to copyrights for funding creative and artistic work. There already is a vast amount of work supported through universities, private foundations and different levels of government. While the existing channels of funding are not sufficient to replace copyright-supported work, they can be expanded to fill the gap.  One route would be to allow individuals a modest refundable tax credit -- an artistic freedom voucher -- that would allow them to give $75-$100 a year to support creative work. This money could either go directly to the worker or to an intermediary that supports specific types of creative work. This funding mechanism would likely generate a vast amount of music, books, movies and other video material.

Oregon offers tax credit for donors to arts groups

Angela Brauer, KMTR-TV News [Eugene, OR], 12/29/11

Oregon residents may be eligible for a unique tax credit if they have donated to an arts and culture group. If a resident [donated] to an arts and culture group by December 31st and [matched] that donation to Oregon Cultural Trust, they qualify for a dollar for dollar tax deduction. The eligible non-profits include public broadcasting groups, museums and performing arts groups. Ellen Singer from Eugene was a donor this year and therefore will get her money back. She told NewsSource 16 that it really is a win-win because you end up giving something that is free for you, but betters the community and state. Nearly 500,000 people statewide are involved in arts and cultural programs. "The Oregon Cultural Trust exists to ensure the future of the arts in Oregon which is good for everybody. It's good for kids, it's good for adults, and it's good for industry. Really, it's not costing you anything to make that gift to the Oregon Cultural Trust but it does result in you getting a double tax deduction," Singer said. An individual can donate up to $500 dollars or as a couple, $2,000 dollars.

Kentucky offers a limited tax credit for arts supporters

Pioneer Playhouse website, 7/28/11

For a limited time, under the new "Endow Kentucky" tax credit, business and individuals who make contributions to non-profit arts groups [can] receive substantial tax credits -- up to 20% of their charitable gift for a total of $10,000. This is in addition to the donor's federal charitable tax deduction. Unlike tax deductions, tax credits are taken off a tax bill dollar for dollar. The credit can reduce a donor's Kentucky tax bill to zero. And these credits can be carried forward for five years. However, only $500,000 in tax credit is available and will be awarded on a first-come, first-served basis through June 30, 2012.

Tax credits often build arts districts, but only 2 states offer tax havens for artists

Daniel Grant, Huffington Post, 1/25/12

In Rhode Island, once an artist is approved to participate, no sales tax will be assessed for any art work sold within the arts district for one-of-a-kind art work or limited production works. An evaluator from the Rhode Island State Council on the Arts [assesses] the applicant's artwork and [determines] whether it qualifies as "one of a kind" and "limited." The categories covered [include] "a book or other writing; a play or the performance of said play; a musical composition or the performance of said composition; a painting or other like picture; a sculpture; traditional and fine crafts; the creation of a film or the acting within said film; the creation of a dance or the performance of said dance." There are approximately 100 designated arts and cultural districts throughout the United States, but Rhode Island is only the second state to legislate tax-free zones for artists in them; Maryland is the other. In some arts districts, cities have authorized zoning variances to permit artists to live and work in area buildings -- tax credits to developers are often used to keep rents or purchase prices below market value -- but Maryland and Rhode Island are unique in their willingness to provide tax havens to artists as an inducement to repopulate downtowns.

Artists' development in Harlem gets final financing from $24 million in tax credits

Robin Pogrebin, The New York Times, 1/30/12

The construction of El Barrio's Artspace (P.S. 109), a development of housing and work spaces for artists planned for East Harlem, will be aided by low-income housing tax credits from the New York City Department of Housing Preservation and Development, Artspace Projects has announced. The tax credits, expected to be worth $24 million, represent the final financing commitment needed by Artspace, which develops arts locations around the country, to begin building the $50 million project. In addition to 10,000 square feet of space for arts and cultural organizations the project will include 89 units of affordable housing, all of which will be reserved for low-income artists. The project is being developed with El Barrio's Operation Fightback, an East Harlem community development organization.