Crain’s New York reported today that the NYC government is going to reduce its tax incentive for productions that film in New York City. I’m going to say right up front that I have very little idea about how productions are financed and even less of an idea of how these types of tax incentive programs are negotiated and decided on. But the part about the revised incentive program that strikes me as the most odd is the fact that the longer a productions films here, the less they will get from the program:
The new plan also limits how long television shows can enjoy the credit. A show would get the full 4% for three years, but the credit would drop to 3% in the fourth year and to 2% the following year.
To me that seems completely counter-productive and counter-intuitive. TV productions that show their commitment to the city should get more of an incentive to stay as time goes on, not less. Productions that film here for years provide long-term jobs in a business where employment is largely transient.
What am I missing? Why would the city create less of an incentive for TV shows to film here?
Originally posted on Filming In Brooklyn. Have a location shooting tip or some on location pictures? Please email Amy.
1 response so far ↓
1 John // May 27, 2009 at 9:38 pm
It’s a matter of sunk costs. Once the show is established in a NY venue, what are they going to do, cut and run because of a 2% tax hike? No, they’ll continue to film in NY. Continuing to offer the break once the show is entrenched is leaving money on the table from the city’s side. The incentive is to get new shows, often on a tight budget, to start here.
It’s very analogous to first-time home and car buyer incentives – once you own a house or car, you’re not likely to go back to apartment renting or riding the bus, so there is no second-time buyer incentive. But people need an incentive to make that jump into that big a commitment.
I’m not sure if the studios play with the tax breaks by only shooting exteriors in NY and filming the rest in California studios, but that would be another reason why their involvement in NY would taper off over time and make longer-term tax incentives less attractive for NY.
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