Industry reaction to proposed U.S. incentive
At the Zurich Summit, film financiers and industry representatives shared their perspectives on the prospects of a U.S. federal film incentive following the recent unveiling of a bipartisan bill by lawmakers. The proposed legislation outlines a 20% incentive that could reach a total rebate of 30% with added bonuses. The push comes as the U.S. industry responds to a production exodus overseas.
Alex Walton, former Co-Lead and Partner at WME Independent, described the measure as “hugely positive” during the summit. He noted that while it will take time for the measure to be implemented and for financial institutions to cash flow it, he expects it to materialize within the next three to four years, prompting foreign tax credits to adapt.
Timeline and economic considerations
The proposed bill text indicates the credit would apply to qualifying film and television productions beginning in taxable years after December 31, 2026, effectively targeting projects that start in 2027. However, participants acknowledged that legislation can take years to pass.
Andrea Scarso, Managing Partner at IPR.VC, agreed that a U.S. incentive would be positive but raised concerns about potential price increases. Scarso cautioned that production prices and budgets could rise to match the increase in tax credits or soft money, a phenomenon observed in certain foreign territories.
Job creation and foreign competition
Sarah Schweitzman, Co-Head of CAA Media Finance, emphasized that many movies are currently made abroad specifically because of existing international tax incentive structures. She stated that federalizing a tax incentive program in the United States would help invigorate crews and generate additional domestic jobs.
A study by the Motion Picture Association estimates that a federal film tax credit could raise U.S. production spending by $125 billion and add more than 143,000 jobs by the year 2035.
