From Hollywood Producers to IATSE Leadership: Pro-Film Industry, Anti-Film Incentive

From Hollywood Producers to IATSE Leadership: Pro-Film Industry, Anti-Film Incentive

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There are powerful forces in the film industry who lobby for film incentives across the globe who believe that being opposed to film incentives means you are anti-film industry, if not willfully hurting it.  This “you are either with us or against us” mentality nonsense needs to stop.  You can be pro-film and anti-incentive.  Indeed, many people (myself included) have been making the counter argument:  film incentives are actually hurting the film industry.  There are many in the film industry who feel the same way I do.  Try telling the people below they are anti-film industry….

Hollywood producer Gavin Palone is perhaps the most prominent person in the industry to speak out against film incentives, even while admitting to personally benefiting from them:

This week I am to have a meeting with a studio about a plan for producing a movie I have in development. When we start the discussions about where to shoot, the first thing discussed won’t be which location has the perfect look or the right caliber of local crew; rather, it will be about which state or province will pay us the most to bring our production to their territory. When I produced Zombieland, there was never a discussion of shooting the movie in California, where most of the action takes place and where one finds the best moviemaking infrastructure and crews. California had no state incentive at that time, so instead we shot the movie in Georgia and received about $4.5 million in tax credits. And as someone who has worked on and benefited from productions that have received funding from the Federal Government of Canada, the provinces of Quebec, Ontario, and Manitoba, the states of Georgia, Louisiana, New York, and California, as well as New York City, I still believe that these subsidies, both in the U.S. and abroad, need to stop. They’re bad economics, they don’t make a film better (at times I think they actually make them worse, since trying to make one location look like another is never as impressive as just going to the place the movie is set), and they’re a misuse of public funds, especially during this seemingly unending recession.

Opposition to state film incentives is not confined to top producers like Palone.  It extends to union leadership of the rank and file below-the-line workers of IATSE.  In a 2009 study of the Tennessee film incentive program, IATSE Local 492 President Peter Kurland told researchers a federal response via a trade action would have prevented the current race to the bottom, which is “completely a losing game”:

Peter Kurland is the President of Local 492, the IATSE union that covers Tennessee and the surrounding regions. Kurland explained that the initial film incentive arms race resulted in response to international incentives attempting to draw production work overseas. “It started with the South Africans and then the Canadians. What should have been done, in my view, the United States Trade Organization should have said ‘this is unfair international trade and you can’t do this’. If they had-if production hadn’t started going to Canada and South Africa-then each individual state wouldn’t have felt compelled to open its own incentive. And since California didn’t do it, suddenly the whole industry is spread all over the country.”

Kurland sees the state film incentive as a necessary evil in the industry, but one that puts local crews and the industry as a whole at the mercy of their legislative body. “Bottom line, its completely a losing game”, says Kurland. “It’s a race to the bottom, and then every state gives away more and more of their tax payer money and its now to the point where most of the production entities don’t want to make projects unless there is incentive money.

From one end of the Hollywood spectrum–major producers to IATSE Locals–people are willing to put self interest aside and call state film incentive out for what they are: disastrous public policy.  Fortunately, Palone and Kurland are not the only people in the film industry not blinded by self interest.  In recent weeks, there have been other examples of filmmakers who were not willing to accept public money from incentive programs.  In Michigan, filmmaker Andrew Hutchison did not apply for the state’s film incentive for a $150,000 zombie film he was shooting in June because, in his opinion, cash-strapped Michigan would be better served spending the money “towards education”:

Hutchison, a former actor, said when a big name movie is shot in Michigan, millions of dollars can be saved, yet all of the money saved is not spent in Michigan.

“My personal opinion is I just don’t think it benefits us. I think we’re already cash-strapped as it is,” he said. “I just don’t necessarily think it’s in our best interest. I think we could use that money and push it more towards education.”

Since the minimum spend to qualify for Michigan’s incentive is $100,000, Hutchison’s film would have easily qualified.  Hutchison felt public money should be used for public services and set self interest aside.   Sadly, some members of the Michigan Production Alliance attacked Hutchison for stating his personal opinion about incentives rather than celebrate a $150,000 project and the cost-free economic impact it was having on the state.  It seems they wanted him to apply for the incentive and take the free money–”with us or against us”.  Others have opposed Michigan’s film incentive even while taking advantage of it…

Famed Michigan filmmaker Micheal Moore has stated his opposition to state film incentive schemes and, like me (and others), prefers a single federal incentive rather then letting the studios pit states against each other:

“We’re all Americans, and it’s pitting states against each other,” he said. “In Canada, you can’t close a factory in Vancouver and move it to Toronto. I can see (adopting) a stronger, federally controlled tax program.

When critics learned one of Moore’s films earned him over $1 million in corporate welfare from Michigan’s film incentive, they shamefully accused him of lining his own pockets with the money.  Actually, Moore (unlike out-of-state studios) invested the money directly back into the state:

Michael Moore wants to bring those theaters back. The Academy Award-winning documentary filmmaker has a plan to refurbish or prop up downtown movie houses in his home state of Michigan — and eventually nationwide…

The money would come from a fund he’s creating with his rebate from a state film tax credit earned by producing his documentary, “Capitalism: A Love Story,” in Michigan. He expects the refund to total about $1 million.

“One of our goals is to create an economic boost, particularly in struggling downtown areas,” he told The Associated Press this week during the annual Traverse City Film Festival, which he and others established six years ago. “Another is to save the art of cinema and encourage great films to be made.”

While Moore is philosophically opposed to Michigan’s film incentive, he was pragmatic enough make a bad public program benefit the state as best he could.  The money he got was invested directly back into the state and made the best of a bad situation.  People in other states have been doing the same…

Earlier this month in Niagara Falls, New York, another filmmaker vowed to repay a film incentive from the city after learning the public money could be put to better use:

Niagara Falls has one of the highest property tax rates in America and, in large part, because of this, the city placed 700 properties on the tax foreclosure list last year. Some  owners lost their homes owing less than $5,000.

Meantime, Niagara Falls had an extra $10,000 lying around, so let’s fund a movie?

Producer James Ventry said that even if his $50,000 film “never makes a dime” he would pay the city back with interest and vowed to “veer away from corporate welfare in the future.”  Ventry said “if you have morals, you don’t go on welfare…we won’t take public money again”:

Although approved for $10,000, Mr. Ventry said he accepted only $6,000, adding the grant was converted to a loan. He pledged his house on 9th and Ferry as collateral.

“Even if the movie never makes a dime, I’m going to pay back every dime with interest,” said Mr. Ventry, “That $6,000 isn’t our money. It belongs to the public.”

Both Mr. Ventry and director Ken Cosentino said they planned to veer  away from corporate welfare in the future. In this, they are unlike many developers in town who won’t do a project unless taxpayers fund them and take all the risk out of the project.

“I know people around here work hard,” said Mr. Cosentino, “I held a job since I was 16. If you have morals, you don’t go on welfare. I’d work at McDonald’s first. We won’t take public money again.”

Even many top executives at the major studios are opposed to state film incentives.  In a University of Texas study published last April, executives speaking on the condition of anonymity told the researchers “incentives are a necessary evil” and would prefer states “dispense with incentives so there is a level playing field”.  One executive candidly admitted that location decisions are now being made by accountants rather than producers “and accountants only care about money”:

A couple executives believe the incentives are a necessary evil, and frankly they would like states to dispense with incentives so there is a level playing field.

One executive said Texas is still at a distinct disadvantage compared to other states, despite the program changes in the last legislative session. According to him: “All the surrounding states (LA, NM, OK, and AK) have better incentives than Texas. Everyone talks to the producers about where they will shoot but we have found accountants to have a large role, and accountants only care about money.”

Accountants may only care about money, but many filmmakers place creative concerns over financial greed.  Director Nicolas Winding Refn insisted on shooting last year’s critically acclaimed film “Drive” in Los Angeles for creative concerns and turned down a budget twice the size if he shot in Detroit with a subsidy:

“As a unique place. It was always hard to define L.A. because it doesn’t have the same familiarity that other urban cities have, like New York, Paris, London, Rome. They have a lot of things in common, whereas L.A. is unique.”

Which makes you wonder why more directors haven’t decided to take advantage of the wonders that exist in Hollywood’s backyard. All of the films Refn highlighted as successful L.A. stories — ‘Thief,’ ‘Shampoo,’ ‘Short Cuts,’ and ‘Live and Die in L.A.’ — are from a bygone era of moviemaking.

And why is this a “bygone era of moviemaking”?  According to Refn, “it all has to do with money and tax breaks…if you can believe it, movies have become about tax decisions”:

“Unfortunately, it all has to do with money and tax breaks,” said the director, disappointedly. “One of my conditions [for 'Drive'] was that we had to shoot the movie in L.A. If we shot the movie in Detroit, I would have almost double the amount of budget.”

Don’t expect Refn to get as lucky with his planned reboot of ‘Logan’s Run.’ “That’s a tax thing,” he said when asked if ‘Run’ would shoot in Los Angeles. “That’s Warner Bros. decision. Unfortunately, it’s not even creative. It’s a tax decision. If you can believe it, movies have become about tax decisions.”

Madness.  What’s more, as the Milken Institute’s Kevin Klowden points out in the following video, state film incentives are exacerbating the erosion of the key industry cluster in Hollywood (which is precisely what the Canadians designed them to do) and the result is bad for everyone–including the major studios:


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