Congress finally came to an agreement on the fiscal cliff, and it’s certainly not what anyone expected when the cliff first loomed in front of the country. But it gets even more interesting when one takes a closer look and discovers the final bill includes some very odd pieces — including a continuation of the tax subsidy to Hollywood films.
And that subsidy will cost American taxpayers anywhere from $75 million to $150 million a year, depending on the estimate.
Under the legislation included in the fiscal cliff bill, films or television shows produced domestically can deduct $15 million from the cost of production, something that applies to individual episodes of TV shows. That deduction is increased to $20 million if the movie or show is filmed in a low-income area.
This original 2004 subsidy only applied to low-budget films, those costing $15 million or less to make, with an allowance for those produced in low-income areas to cost $20 million or less. But in 2008, the low-budget restriction was removed and a production company could deduct the subsidy regardless of the overall cost of the project. And the 2008-version of the subsidy was extended in the fiscal cliff deal.
In a time of fiscal crisis, when average Americans will see their taxes increase, the last thing the federal government needs to do is give subsidies to the wealthy film industry. But with President Obama’s buddy-buddy relationship to Hollywood, it’s really no surprise.
