WHAT WE LIKE: Apart from offering an uncapped system that accommodates all productions (big, small, studio and independent), that has one of the highest rates around (up to 35%, including nonresident wages), and which incorporates a guaranteed floor value for its tax credits (85% via a state redemption), Louisiana’s main appeal is that its program is long-running (since 2002), well-administered (Chris Stelly knows his stuff), and has already gone through its growing pains and come out stronger (a former film commissioner is serving jail time; crews are now 8-9 deep). Even with a recent change in leadership which caused some pretty substantial logjams and policy tweaks (mostly involving related-party transactions), Louisiana still earns enough points to top our list. By all accounts the state will see another record year of filming in 2012. And, with every passing year, more vendors and crew relocate to Louisiana, meaning that more of your production budget will qualify for earning tax credits, including financing costs (due to recent partnerships between Louisiana-based lenders and the major film-lending banks). State-of-the-art soundstages abound.
WHAT WE DON’T: Although Louisiana’s vast footprint and diverse ecology can double for numerous locations, if you need a desert, a snowy mountainscape, or Manhattan-like skyscrapers, it may be cost-prohibitive to try and pull off there. Also, the film office’s crusade against related-party transactions serves as a disincentive for indigenous production, and some local production companies are in search of more friendly programs elsewhere.
RECENT PRODUCTIONS: The Host, Killing Them Softly, Bullet to the Head, G.I. Joe 2: Retaliation, The Twilight Saga: Breaking Dawn – Part 2, Abraham Lincoln: Vampire Hunter, Green Lantern
WHAT WE LIKE: Georgia has an uncapped 30% transferable tax credit. You have to find a buyer, but there are plenty of them in Georgia and credits trade for higher prices than in most other states. Plus, there is good vendor and crew depth largely as a result of the fact that Georgia was a regional production hub before they passed their tax incentives. While Georgia has a $500,000 per person salary cap, it only applies to W-2 employees and not loan outs, so your talent costs qualify without restriction, which is huge. In addition, Georgia is developing a program that would make the tax credits non-recapturable as long as the producer voluntarily submits to an audit. If this new program is implemented and administered well, it can cure many of the problems with the system (see below).
WHAT WE DON’T: There are 3 things. First, there is no formal tax credit certification process; you never get anything from the state acknowledging that you have earned $xxx worth of tax credits. As a result, buyers rely largely upon the creditworthiness of the producer when deciding whether to buy credits (and at what prices). That means that the studios get good rates for their credits, but independents don’t. Most of the production work taking place in Georgia is, therefore, by studios. If credits become non-recapturable, Georgia will improve for independents. Second, Georgia does not allow finance costs to qualify, even if paid to a Georgia lender, and that makes little sense at a time when the local financial community there is making some pretty outstanding investments in the US film industry (SunTrust was one of the principal banks involved in Legendary's $700 million credit facility and in New Regency's $500 million credit line). Third, credits can be recaptured (at least for now).
RECENT PRODUCTIONS: Lawless and The Blind Side.
WHAT WE LIKE: They are hungry! A couple of years ago, they lost the Miley Cyrus movie, The Last Song, to Georgia just as the Governor was preparing to announce it was coming to N.C. As a result, they quickly enacted a fully-refundable 25% tax credit. There is no need to sell the credits and thus no corresponding reduction in value. Crews are limited but growing fast, and they are hosting some pretty significant projects. Plus, they liberally allow goods to be procured from outside the state through local production service companies, as local availability is still somewhat limited. A first class stage and production facility exists in Wilmington.
WHAT WE DON’T: Only the first $1 million paid to any person qualifies, so there’s little point in shooting films there with A-list cast. The program sunsets at the end of 2014, so they are not likely to see any major infrastructure build out, which is a shame. At this point, the administrators of the program do not allow financing costs to qualify, even if sourced from within the state, and generally require at least a first cut of the project to be delivered before they will review the final application, which can delay the refund process.
RECENT PRODUCTIONS: Iron Man 3 (they swiped it from a floundering Michigan) and Hunger Games.
WHAT WE LIKE: Massachusetts has a sound and reliable 25% tax credit that can either be transferred or redeemed by the state for 90% of the face value. That’s clever and it makes the MA credits inherently financeable. Plus, there are no caps.
WHAT WE DON’T: Inexplicably, costs related to completion bond, workers comp, insurance and financing don’t qualify. All in all, if the rate were marginally higher and these elements qualified, Massachusetts would probably be the top incentive jurisdiction in the country.
RECENT PRODUCTIONS: Moneyball, The Town, The Fighter, The Social Network.
WHAT WE LIKE: The rates are high. In addition to a 30% refundable state credit, New York City throws in an additional 5% (subject to a $30m annual cap). Given the number of productions that desire to shoot in the Big Apple, this has become a very popular program, and that’s why it garners the #5 spot on our list, not because the incentives are easy to use (they are not).
WHAT WE DON’T: Where to start…? First, the credits are subject to periodic appropriations from the government. The allocations are spoken for quickly, which means that when it’s your turn to collect your tax refund, there might be no cash left, and you might have to wait until a future appropriation becomes available. Plus, the refund payments are staggered over 2 or even 3 years in many cases. So, look at the system more as a way to generate extra distribution proceeds over the long term and less as a way to offset current production costs. Financing NY credits requires massive discounts and interest reserves, so a relatively small amount is left available for production. Lastly (only because we’re running out of room), the state requires that a large amount of the production must take place within its borders and requires using qualified production facilities. Thinking about shooting interiors elsewhere and picking up a small amount of exterior shots in NY? Think again.
RECENT PRODUCTIONS: Too numerous to name.
WHAT WE LIKE: This is one of the most intelligent programs around, and therefore (unlike New York) it holds a top spot despite it’s lack of popularity. The centerpiece of the program is a 40% transferable tax credit on amounts paid to PR residents and vendors (capped at $50 million annually; recently increased from $15 million) and a 20% uncapped tax credit on the salary of above-the-line performing artists, and now, producers and directors as well without regard to residency. As a result, Puerto Rico works for studios and independents alike. The Commonwealth has long sustained a latin-oriented film industry, so crew and resources are widely available. Administration is always a major factor with tax incentive programs, and the government of Puerto Rico has a film office staffed by eager, hard-working and knowledgeable professionals. You’ve probably met them; they are present at every major film festival and market. Don’t overlook that Puerto Rico has divere scenery that is impossible to find on the mainland. And, finance costs qualify as long as they are paid to a locally licensed financial institution or financial intermediary.
WHAT WE DON’T: Only a couple of catches. First, the initial application fee can be high. It’s 1% of qualifying spend. On a big budget film, that can add up quickly, though it is capped at $250,000. Don’t bother with the certification until you are 100% sure you’re going to shoot there. Second, in order to earn the 20% credit on above the line personnel, they (or their loan-outs) must agree to be taxed at the 20% withholding rate. It’s not as bad as it seems, since the full 20% is creditable against their U.S. tax liability (which should be well over 30% anyway). But, some actors can be finicky and some abhor taxation. Have that discussion with them early on to avoid awkward conversations during production.
RECENT PRODUCTIONS: The Men Who Stare at Goats, Rum Diaries, Runner, Runner.
WHAT WE LIKE: New Mexico offers a 25% refundable tax credit (subject to a $50 million annual cap). Cast payments qualify if structured using a “super loan-out” (subject to a $5 million in credits cap for all performing artists). New Mexico has significant infrastructure and crew base (a remnant of their previous, more successful tax incentive) which helps it reach the #7 spot on our list, along with the fact that there is no required minimum spend and stand-alone post-production projects can qualify.
WHAT WE DON’T: New Mexico used to be the premiere tax incentive in the county, but they gutted their program in 2011 by instituting the annual cap and by staggering tax credit issuances out over multiple years (over $2 million in tax credits, issued over 2 years; over $5 million in tax credits, issued over 3 years). Plus, there is no guarantee that refund of the credits against the annual pool will be available at the time the production is able to apply for it.
RECENT PRODUCTIONS: True Grit, Fright Night, The Lone Ranger.
WHAT WE LIKE: The state is popular largely because it provides a north-eastern back-drop without the craziness/expense of filming in New York. It offers a 25% transferable tax credit with a 5% bonus if the production utilizes a qualified production facility (currently capped at $60 million annually) and cast salaries qualify (up to $15 million aggregate cap for all above the line services). It’s a nice place for a few studio projects each year.
WHAT WE DON’T: There are several. First, $60 million is a relatively small annual cap, so Pennsylvania will never grow into a regional hub, especially given significant competition in the aggregate from New York, Connecticut Massachusetts and Rhode Island. Second, bizarrely a buyer of the tax credits can only offset up to 50% of his/her/its tax liability. That reduces demand for credits, which drives the prices down, and thus producers end up getting less cash back. Third, finance fees don’t qualify even if paid to in-state lenders.
RECENT PRODUCTIONS: Law Abiding Citizen, Transformers: Revenge of the Fallen.
WHAT WE LIKE: The base 30% transferable tax credit can be bumped up to a high of 44% for some line items by hiring locally, in the off-season, and outside of the main tourist areas. It has looks that can’t be replicated in the lower 48, and it provides a nice alternative to filming in Canada for those films that need wintry settings. Lastly, Alaska strictly limits recapture of the tax credits (in fact, it’s the model for non-recapturability).
WHAT WE DON’T: (1) It’s cold. (2) Not many people/businesses pay income tax in Alaska (in fact the government pays most people to live there), so demand for tax credits is very low, and that negatively affects pricing and hence the producer’s cash return is lower. It’s no wonder that Alaska seems to draw lower budget reality type shows that don’t mind the harsh conditions or require significant volumes of tax credits. The current program sunsets in the summer of 2013 and the effects of its replacement program’s rules and details have yet to be determined.
RECENT PRODUCTIONS: Ice Road Truckers, Flying Wild Alaska, Deadliest Catch, Alaska State Troopers, Gold Rush.
WHAT WE LIKE: It boasts a 30% transferable tax credit and is situated in the popular north-eastern corridor. Connecticut is a haven for productions seeking to escape the craziness/expense of shooting in New York and is popular among productions that need to use incentive dollars efficiently to offset production costs, which does not work as well in New York.
WHAT WE DON’T: They have made a few silly mistakes that needlessly devalue their tax credits. First, the credits don’t offset personal income tax liability and there are not a lot of companies in Connecticut that pay corporate taxes. The largest consumers of the credits are the insurance companies, but even they can’t use the credits to offset more than 55% of their overall tax liability. And, the coup de gras, these days no more than 50% of a production’s tax credits can be transferred in any given year, meaning that it takes at least two years to exchange credits for cash. Like New York, that means that tax credit funds don’t really help offset production costs.
RECENT PRODUCTIONS: The Big C, The Jerry Springer Show, Deal or No Deal.
California, Hawaii, Utah, Ohio, and Illinois.
Florida and Mississippi
Michigan, Iowa and Arizona