Why Should Hollywood Get a Federal Tax Credit? Nearly $250 Billion Is On the Table, Study Says

Hollywood is bringing some receipts to bolster its push for a federal film and television tax credit in D.C.

A federal tax incentive program could yield nearly $250 billion total gross value for the country between 2027 and 2035, according to a study commissioned by the studio trade group the Motion Picture Association released on Tuesday. That’s a figure that encompasses direct, indirect and induced spending, received by businesses as varied as transportation vendors, hotels and local restaurants, per the report from the consulting firm Olsberg SPI.

As for direct spending, the report claims the country could see $125.3 billion in added U.S.-based production spend between 2027 and 2035 if Congress comes together to pass a federal tax credit. And on the employment front, the incentive could result in roughly the equivalent of 143,500 full-time jobs annually and $133.1 billion in additional worker income.

All of this is based on an economic model assuming a base 20 percent tax credit on U.S.-based labor expenses, with some uplifts in specific circumstances, a formula that is in discussion at the federal level. The model also assumes that the federal incentive will only apply to productions spending at least $1 million in the U.S.

A group of U.S. production advocates — including President Trump’s “special ambassador” to Hollywood Jon Voight and an array of other industry leaders — presented these findings in a virtual press conference on Tuesday aimed at encouraging Congress to pass a tax credit.

Rep. Laura Friedman (D-CA), who is working to introduce a federal tax incentive legislation in Congress. “Sixty-five countries have decided it’s worth competing for film and television production. The United States hasn’t, and too many Americans have lost their jobs because of it,” Friedman said in a statement. “Every production that goes overseas takes electricians, carpenters, drivers, and small business revenue with it. A national film tax credit will create more than 140,000 American jobs in all fifty states and nearly $250 billion in economic activity. That’s a commonsense, bipartisan fix, and I’ll keep working to get it done.”

The study also digs into estimates as to what would happen to U.S. production without federal intervention. Currently, the U.S. accounts for 42 percent of television spend and 34 percent of film spend, according to figures from ProdPro that were used by Olsberg SPI. With the federal incentive, the company argues, U.S. share of global production expenditure could reach 65 percent for film by 2030 and television by 2032. Without the federal incentive, it could fall to 29 percent for television and 25 percent for film.

Put in terms of dollars and cents, the report estimates that U.S. production expenditure could rise to $38.7 billion in 2035 with a federal incentive, whereas without it the expenditure could fall slightly to $16.6 billion.

The report is part of a wide-ranging effort to win broad support in Congress for legislation rewarding productions that shoot in the U.S. — an initiative that President Trump has championed but could be met with skepticism in Congress once language is introduced. Though the effort has bipartisan champions, the idea isn’t universally beloved: In early September, the Wall Street Journal editorial board blasted the idea of providing “handouts for Hollywood” on a federal level.

In response, advocates are making a big show of the bipartisan support the idea has garnered. “A federal incentive would be a gamechanger for our industry,” MPA chairman and CEO Charlie Rivkin said in a statement. “This study tells us that we can bring more opportunities to life for people in all 50 states who bring great stories to life — the casts and crews, the set builders, construction workers, truck drivers, caterers, and more. That’s precisely what’s bringing President Trump, Republicans and Democrats in Congress, studios and unions and all of us together: the need to leave a positive and enduring imprint on American creativity and America’s economy.”

While Voight, the MPA and others have been attempting to realize a federal tax credit for more than a year, a breakthrough arrived in the form of a Truth Social post from President Trump in August. “I am going to suggest that Republicans and Democrats get together, and immediately craft Legislation to save the Movie, Television, and Entertainment Business in America,” he wrote, adding, “Let’s get this done!”

With the president’s approval clear, Rep. Nathaniel Moran (R-TX) is said to be partnering with Friedman on the legislation, with specific language that hasn’t yet been announced.