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Senate Playing a Support Role for Hollywood

Capitol Hill: Widespread foreign poaching of U.S. film productions prompts legislators to plan tax incentives for domestic projects.


WASHINGTON — In an effort to stem the loss of U.S. film-related jobs to cheaper foreign locales--a chief concern among Hollywood's rank and file--a bipartisan group of senators plans to introduce legislation as soon as today that would give a tax break to companies that keep production at home.

That such legislation is even contemplated suggests the extent of the inroads made by other countries into an industry that was once dominated by Americans from start to finish.

Countries such as Canada, bolstered by trained workers and weak currencies, have lured scores of film productions. Many of Hollywood's leading labor groups say other countries have gained ground unfairly by promising large subsidies at the same time they shut out lower-level American workers.

"Runaway" film productions cost the American economy as much as $10 billion a year, the Commerce Department said early this year--although some industry observers dispute that estimate as overstated.

The legislation being prepared for the Senate would grant a substantial wage credit to the producers of small and mid-size films who do the majority of the film's work in the U.S.--mimicking some of the tax incentives already in place in Canada and other foreign hot spots for film. But the legislation is tailored to avoid benefiting big-money productions and big stars.

"It's about parity," said Sen. Blanche Lambert Lincoln (D-Ark.), who became interested in the topic when she heard from industry leaders last year during the Democratic National Convention in Los Angeles.

"This is about trying to keep the kinds of jobs we want to keep in this country. The benefits don't just flow to the film and television industry--they create an incredible ripple effect in a variety of local businesses, from restaurants to hotels to construction."

Film production going abroad has become a concern not only in Hollywood but also in regional film-production centers, where the loss of even one or two productions a year can significantly chill the local film community.

Many of the runaway films are made-for-television movies with relatively modest budgets and the quick turnarounds that had made them a staple for actors and behind-the-scenes laborers. The Commerce report--largely based on industry studies--said 139 of 308 U.S.-developed TV movies were filmed abroad in 1998. That compared with 30 in 1990.

"Our bread and butter came from movies of the week, and they're gone," said Dawn Keezer, Pittsburgh's film commissioner and head of Film U.S., a group of nearly 200 film commissioners who have been lobbying for federal help for more than two years.

"We've done nothing to stay competitive in this country," said Keezer, who says she won't watch movies set in Pittsburgh but filmed in Canada. "We created this industry. We've built it and now we've let it walk out the door."

The bill, co-sponsored by Lincoln and Sens. Olympia J. Snowe (R-Maine), John B. Breaux (D-La.), Richard Durbin (D-Ill.) and Mary Landrieu (D-La.), would allow a 25% wage tax credit for employers on U.S.-based productions with labor costs of more than $200,000 and less than $10 million.

The credit would jump to 35% if the production was based in a low-income community. The legislation is also designed to benefit small businesses that cluster around movie productions, extending the wage credit to employers such as caterers with staff working full-time on the movie.

Jean M. Prewitt, president of the American Film Marketing Assn., a trade organization that has been one of the key groups pushing the bill, said focus has been on helping where it can make a difference.

"Some of the preliminary studies that have been done indicate that [the wage credit] could make a 6% difference in the budget of an individual production," she said. "That creates the margin between being forced to go to a cheaper location and having the ability to choose to stay."

And Prewitt said industry groups had worked with Sen. Lincoln, a Senate Finance Committee member who has taken the lead on the bill, to avoid legislative pitfalls.

For instance, there is a $25,000 cap on credit for individual salaries--one of several efforts to target average workers with the legislation, avoiding the political minefield of being seen by lawmakers as a subsidy for the multimillion-dollar salaries of red-carpet movie stars.

The $200,000 minimum was established in response to concerns that the federal government would otherwise subsidize pornographers, whose bare-bones budgets typically run less than that amount.

Still, backers of the bill say its proposal is the equivalent of reaching "the starting line."

With the movie industry more often bashed than praised on Capitol Hill, the bill's supporters have worked to bring lawmakers from across the country on board. They are trying to build support in the House, where some Republican leaders are wary of wage credits. The bill's best chance, they say, is in making it clear it is about a lot more of the country than just California.

Jack Shea, president of the Directors Guild of America, said the bill would "help the American motion picture industry compete in the international marketplace on a level playing field."

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