Film Execs Ponder Federal Film Tax Credit Impact, Timeline & Potential Price Rises — Zurich Summit

At this weekend’s Zurich Summit a group of film financiers were asked by Deadline for their thoughts on the prospects of a U.S. federal film incentive.

Last week, a bipartisan group of lawmakers unveiled the bill for a 20% incentive, which with bonuses could bring the total rebate to 30%. The move has long been called-for by the U.S. industry concerned by the exodus of production overseas.

Alex Walton, former Co-Lead & Partner at WME Independent, told the Summit the move was “hugely positive”: “It’s wild to think there hasn’t been an efficient tax credit in America. It has helped many other countries. Spain is booming because of it now; and all over Europe. It’s going to take some time to be realized and for financial institutions to be able to cash flow it. But you’ve got to believe it will happen within the next three-four years, and then that will see all the foreign tax credits compete harder to maintain their positions.”

A start date is not yet set. The proposed text from last week stated that the credit would apply to qualifying film and TV productions beginning in taxable years after December 31, 2026 (effectively targeting projects starting in 2027). But bills can take years to pass.

Andrea Scarso, Managing Partner at prolific financier IPR.VC, whose credits include Marty Supreme and Materialists, agreed that a U.S. incentive would be “positive” but also cautioned against rising production costs: “It remains to be seen whether the prices and budgets are also going up by the same amount, which is something that happens in some foreign territories when they increase the amount of tax credit or soft money. It’s always a balance. But overall, I think it’s good news.”

Sarah Schweitzman, Co-Head CAA Media Finance, noted: “What’s important is that when you look at some of the international markets, you realize that we’re making movies there because of a tax incentive situation and I think if we’re able to federalize a tax incentive program in the U.S. it’s going to create many more jobs and invigorate crews, which is something we absolutely need in the U.S.”

A recent Motion Picture Association study claimed that a federal film tax credit could increase U.S. production spending by $125BN and add more than 143,000 jobs by 2035.