President Donald Trump’s popularity in Hollywood could soon turn for the better.
Trump expressed support for a federal tax incentive for films and TV made in the US. The plan came after discussions with Jon Voight, who was appointed by the president as his “special ambassador to Hollywood.”
“I’m going to propose that Republicans and Democrats come together and immediately enact legislation to save America’s film, television and entertainment industries.” Trump wrote on social media Monday evening.
A tax credit for domestically made films and TV shows could provide a major boost to Hollywood, which has been hobbled by the pandemic, work stoppages due to labor strikes and a decline in local production as projects move to countries with more generous incentives.
States like Georgia, Louisiana and New York already offer production tax credits, and a federal stimulus could sweeten the deal even further.
“This is great news for people working in the fast-paced and challenging film production industry,” said Paul Hardart, an entertainment industry professor at NYU.
Rewarding studios for shooting in the U.S. could also help support businesses across the country that provide additional support to the film industry, such as hotels, restaurants and makeup artists.
“It’s not just about LA,” says Michael J. Wolf, the CEO of media-focused consulting firm Activate Consulting.
Ta-ta at rates
Trump’s proposal for production incentives was much better received by the creative community than his idea for “tariffs” on films made outside the US, which faced with serious logistical questions.
The chairman called for “a 100% tariff” on foreign-made films last May and doubled in September, saying it would solve the “long-standing, never-ending problem” of Hollywood production.
But the proposal caused confusion over how an import tax would be levied on a virtual product. It was also unclear how films and TV would be treated if they were only partially filmed or edited abroad.
Netflix co-CEO Ted Sarandos said in March that he Trump spoke out about the film tariffsgiven the disruptive impact they could have had.
“Having incentives versus tariffs is much better,” Sarandos said.
Hardart said a stimulus for film production “is actually quite exciting news and makes a lot more sense than tariffs,” which he said last May would “affect the entire industry.”
“It’s kind of a transition from a stick mentality to carrots,” Hardart said.
Selling tax breaks and avoiding loopholes
While Trump’s proposal may win over Hollywood, it may also face challenges.
Some Republicans may be wary of the idea of giving production incentives to Hollywood creatives, especially tax breaks for so-called above-the-line talent such as star actors and directors.
Congresswoman Nicole Malliotakis, a Republican from New York, told Variety in August that “members of Congress want to make sure we don’t pay a multi-million dollar salary for a celebrity.”
“You’re going to have some Republicans who are going to see this as a giveaway to liberal Hollywood,” Malliotakis said of movie tax breaks.
Trump is trying to sell this move by saying in his post that a manufacturing boost will “benefit ALL of America.” The key could be to frame this move as a way to level the playing field in a crucial American industry and prevent jobs from going abroad while supporting workers like caterers.
“Tax policy should not push these jobs abroad,” Wolf said. “How can you disagree about job creation?”
The president is playing up the idea that Hollywood needs his help, saying Monday that Tinsel Town is “a complete and total disaster” and is being “driven out in its entirety.”
Hollywood-skeptical Republicans could support a film production incentive to prevent tech giants like Google’s YouTube from gaining too much power over the media. Another argument is that studios need these credits to brace for the looming threat of AI-generated content.
A number of questions remain in boosting film and TV production, from timing to details.
Trump said in his post that the legislation would be completed “quickly” and “efficiently,” although he did not provide a timeline on when it would be introduced.
A federal manufacturing incentive program must also strike a balance between being generous enough to attract domestic investment without pouring taxpayer dollars into projects that would have been built anyway.
“The incentives must be meaningful enough to change where a production is made, predictable enough that manufacturers can build it into their financing, and structured so that the benefits actually flow to American workers,” Hardart said.
Hardart continued: “If it simply becomes another subsidy without changing production decisions, then it will only give taxpayer money to productions that were already planned for the US.”
