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First, the setup:
Before a film industry boon goes bust in the Chicago area, Illinois lawmakers are debating whether to extend additional tax incentives to filmmakers being lured to other states that offer even better breaks.Legislation that passed the Senate 58-0 Friday would extend the film tax credit until January 2009 and provide greater tax incentives to production companies that employ residents from high-poverty areas.
The current film tax credit, set to expire next January without an extension, allows film companies to deduct 25 percent of their total labor costs for each employee who is an Illinois resident.
Under the proposal now in the House, the law would be tweaked so firms could claim a 20 percent tax credit on total production costs and receive an additional 15 percent break on labor costs for employees hired from high-poverty areas.
Now, the question: Do you think this tax break is the right thing to do?
posted by Rich Miller
Monday, Apr 10, 06 @ 2:58 am
Sorry, comments are closed at this time.
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Next Post: Afternoon politics open thread
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I’d want to look real hard at what the Teamsters are doing first before I’d agree to this tax credit.
I got my education with them doing a powerpoint presentation at the Amercian College of Cardiologists meeting at McCormick place a few years back. The only guys in suits at the breakout session I did were the two teamster electricians. One to work the recording equipment and the other to plug in my laptop into the projector. The Docs and myself all in jeans and polo shirts. I wanted to use my own laptop and do my own powerpoint… I had to argue with the Teamster to do that.
No idea what those two made for that hour but the lady who organized the presentation said she’d never do it in Chicago again because the expense was horrendous.
Teamsters are killing industry here and they need to wake up about the feather bedding.
Comment by Bill Baar Monday, Apr 10, 06 @ 5:43 am
Does the person in charge of this know where Pontiac is yet? The person they put in charge knows NOTHING about the state of Illinois outside of Chicago.
Has the office promoted any project downstate or is this program only for Chicago? If it is only Chicago, let Daley pay for it.
Comment by Anonymous Monday, Apr 10, 06 @ 6:07 am
Yep, it’s necessary. Canadian locations are cleaning our clock. Film making is one of those industries where trickle-down effects are real and somewhat measurable. Due to the large number of ad agencies in Chicago, more than anything else, we have a powerful production community there, but it has suffered contractions like many other businesses due tot he economy. the production community is a mix of a few large operators and a number of small mom and pops and sole proprietorships that feed off of them. Kind of like a coral reef, it’s an economic ecology. The small operators use the cash injections from regular large film projects to re-capitalizes and modernize their gear, to tide them over while they make most of their money on smaller jobs. Without the big economic stimuli of movie productions, this community dries up, we lose businesses, potential clients decide to seek the production support elsewhere, more small operators die off, and the whole industry suffers a major contraction in areas like advertising and TV production as well as film. If we keep the chicago film business alive, it helps the whole state. There should eb better outreach at the film office, but the entire state infrastructure is riddles with incompetent political hires thanks to Rod. The tax breaks may stem the bleed-out due to weak promotion efforts.
Comment by Gregor Monday, Apr 10, 06 @ 6:57 am
Yes and if the Dems would apply that way of thinking to ALL taxes / fees / permits and licenses in IL, we would have government friendly to business. THAT would create more jobs and growth than these people are capable of imagining.
Comment by North of I-80 Monday, Apr 10, 06 @ 7:34 am
Rod said we had to close all “corporate loopholes.” I guess he meant only those he can’t use to extract campaign contributions.
Comment by Anonymous Monday, Apr 10, 06 @ 7:37 am
Guess the film communities in Bloomington, Champaign, Carbondale, Quincy, Rockford, Springfield, and other areas do not exist or do not have high poverty areas. Thought it was the movie industry for the state, not just Chicago. Plugging in that laptop does take a licensed electrician in Chicago. It is very technical work requiring years of training. Beside, didn’t the instuctions come in multiple languages? That laptop may short out the city.
Comment by zatoichi Monday, Apr 10, 06 @ 7:49 am
Absolutely not.
The Governor chose to vilify existing businesses and eliminate good tax policy such as the Research & Development credit in order to raise money in Hollywood. Couple that with a billion dollars in new taxes and fees and its no wonder that Illinois lags behind the country in job growth since this Governor took over.
We need to protect and preserve the current jobs.
Comment by 4% Monday, Apr 10, 06 @ 7:57 am
I don’t know what Illinois stands to gain from this tax credit. Most of the jobs on these films are brought with the production company from LA or wherever they came from. They block off streets and prohibit people from walking in certain areas that are a long distance from where they’re shooting, all because they need their buffers. I say they can go to hell, or Canada. All the hassle isn’t worth the 3 seconds of prestige once the movie is complete.
Comment by GOPJay Monday, Apr 10, 06 @ 8:06 am
Generally, I think it’s good public policy, particularly the part about additional incentives for hiring local residents. I do share Bill Baar’s concern that the tax incentives may be doing norhing more than off-setting the often outrageous labor costs (and statutory obligations to use organized labor) in the city.
Comment by gopartisan Monday, Apr 10, 06 @ 8:19 am
I think we really have to question if these types of tax credits are of any real value.
The past is littered, nationally and in Illinois, with cases of corporations who were given tax breaks for locating and hiring somewhere and who reneged on the deal and left town a few years later, leaving even more unemployed than when they came. And they didn’t have to pay anything back because the pols who negotiated the deal were idiots.
There are also questions about whether companies
really look at tax credits when they decide to bring business somewhere, or whether they would have located/done business there anyway. There is substantial evidence that tax credits do not figure heavily in most business decisions. And if the business were operating so close to the bone that tax credits were needed, do we really
think that business is going to make it.
Sounds like another way for Illinois’ less than brilliant guv and legislature to look like they are doing something about the lack of good jobs.
With our money, of course.
Comment by Cassandra Monday, Apr 10, 06 @ 8:29 am
Hollywood is a sexy industry with many beautiful people working in it. I favor the tax break.
We can shift the burden of paying for this to the industries no one likes, like the trucking, coal mining, or manufacturing industries. We can raise taxes and fees in those industries because they don’t attract good looking people that we want to associate with, to Chicago.
Comment by Leroy Monday, Apr 10, 06 @ 8:30 am
Look at the facts! Take a look at how these people view us now. There are three TV shows about Chicagoans. Not a one of them is filmed here. They don’t need our money to use us as comic foils for cheap laughs. When they want Chicago, they grap digital film images. If they don’t care, then they just shoot where they live, and drop us it as a backdrop. Want to see Chicago with mountain ranges, chapparal and palm trees? Just watch these shows. Why give them money when they don’t care?
They set the condition. This is how they use us. There are no qualms in doing whatever they want for whatever story line they want to give us. Its called show business! It is supposed to be fake.
Hollywood is playing us as rubes and we are fulfilling that role by giving them money to do it. If a studio wants our money, then we should get something in return. They shouldn’t be able to shoot “scenes in Chicago”, without coming here to do it. Not some LA backlot.
What gets me is the fact that we are seeing our state businesses get taxed and ignored. Instead we are seeing these glamour pusses being treated like stars. Politicians see themselves as stars, and are too enamoured of Hollywood to think clearly. Remember people, Hollywood is fake, so let’s stop stumbling over ourselves trying to win these people over.
Illinois-based film studios should be getting the same tax breaks as other Illinois businesses. Hollywood gets what they give us - zero.
Comment by VanillaMan Monday, Apr 10, 06 @ 9:24 am
Shouldn’t we see a simple cost-benefit analysis? Big media loves tax credits because it helps their industry. Taxpayers need to know if this is bringing in more revenue than it costs. Or is it just an ego trip for a few politicians?
Comment by phocion Monday, Apr 10, 06 @ 9:55 am
Phocion hit the nail on the head. The problem with all tax expenditures (a.k.a. tax breaks, tax loopholes), is that they undergo very little real cost-benefit analysis. Instead, we get what I call “Chicken Little Analysis”, where somebody tells us how the sky is going to fall if we don’t continue to give away money.
Experts tell us that every dollar spent on education puts $8 back into the economy, and every dollar spent on substance abuse treatment saves taxpayers $7 down the road. Do these tax credits bring that rate of return? I don’t think so. But can anyone ell us for sure? Nope. So, I say until Hollywood can put up some numbers, they should get bumpkis.
Besides, every time a movie is made in Chicago, I hear film critics rave about what a great location Chicago is, the character it brings. How Chicago is like a leading member of the cast. What other leading cast members pay the studio to put them in the film?
Speaking of which, I saw a great interview with Chicago native Harold Ramis (of Ghostbuster fame). He’d just shot yet another movie in Chicago. The interviewer asked him what his secret was for getting the studios to produce films in Chicago. His response: “I just tell them that if they don’t want to shoot it in Chicago, they need to find a new director.”
Comment by Yellow Dog Democrat Monday, Apr 10, 06 @ 10:11 am
I’ll bet it’s not as big as the subsidy that Blagojevich gave ADM, which did not even make the leftstream media.
Comment by Cal Skinner Monday, Apr 10, 06 @ 10:17 am
Wow, do you think that the Dem,’s will figure out that tax cuts help other sectors of the economy as well?
Comment by anon Monday, Apr 10, 06 @ 11:40 am
Look, this is specific case. Film productions are temporary one-shot entities, not continuing businesses, so you can’t think of them quite the same way. Perhaps the closest thing they resemble are conventions that can pick and choose where they are held, and get cities to compete for the business they bring to town. Except conventions are annual events, and films are one-shots.
The producers of each film start with a fixed budget and crunch the numbers to see where they can get it done for the least amount of money. Thanks to massive subsidies in Canada, a lot of the business that used to go to Chicago goes to Vancouver, Toronto, and the like. The film comany brings their lead actors and lead crew with them, then hire locals to fill in the rest of the jobs because they don’t have to pay them for housing and the like. The production company tends to rent a lot of the gear and accessory equipment locally as well. Canmeras, lights, generators, etc. all are rented locally.Grips, props, costumes, extras, riggers, electricians, technicians, all get hired locally. The Illinois film production book lists them by the hundreds. All of those temporary jobs, a week or several weeks worth, are local jobs that pay local and state taxes. People in Illinois film business get this kind of sporadic, seasonal work on big-budget films, then spend the rest of the year eking out a life on smaller local productions and commercials. there are a critical number of large prdctions that need to be made here annually to keep our production community healthy. Without the infusions of cash from visiting Hollywood productions, there is not enough business for them all to divide between each other, and some willhave to fold. Then the next time producers are shopping for locations, they look at Chicago and Illinois and see there are fewer and fewer of the indiginous resources, they calculate the cost of having to bring those resources along with them from the coast, house them, feed them, insure them, etc. and the numbers say it doesn’t pay to do it in Chicago, so they go another way. This leads to a further erosion of the local production capacity, until there is little left of interest to anyone but regional players. A death spiral.
Mayor R.J. Daley put up barriers to anyone making films in Chicago for years for fear of the city being put in a bad light, it wasn’t until he died and we got more enlightened people dealing that the Chicago production community got that big 70’s-80’s renaissance, and the money it brought in. The incentives are a way to recapture enough of the big dollar production business that we can bankroll the small operators and keep them afloat between their regular gigs, making and spending money right here in the state every day.
Complaining that this only helps Chicago is like complaining O’Hare gets all the glory for airports. George Ryan put it clearly, the tax revenues from O’Hare benefit the entire state, as well as Chicago. It’s GRF money.
I think there might be something to offering the small local producers a break, but maybe it should be on insurance, which is every bit as crazy a racket for producers as it is for doctors and their malpractice coverage.
As tot he teamsters cracks, well, i’m a labor supporter, but the abuses of thr teamsters and electricians unions around McCormick place are legendary: they drove the NAB broadcasting convention to Vegas with their imitations of Egyptian tomb paintings (guys with their hands out). If we could negotiate a balanced arrangement where the high overhead they create was moderated in exchange for more work opportunities, and we got some more hotel capacity, maybe we could wean back more convention business. But the tack Chicago seems to be taking on that score is to pin all hopes on gambling and casinos to bring back the convention traffic. I dont believe that’s enough.
Comment by Gregor Monday, Apr 10, 06 @ 12:26 pm
Anon 11:40 a.m. –
As the Speaker says, “Numbers don’t lie.” I don’t subscribe to Caveman Economics, or as the Chicago Tribune says “Tax Cuts Good.” If you subscribe to that logic, unchecked, it leads only to the conclusion that we should have zero taxes. That leads to zero government. Only idiots and anarchists argue that.
So, now that we all agree that some government is good and some level of taxes are necessary, the question is: why is one industry more deserving of a tax expediture over another industry, or would we create more jobs if that benefit were more widely distributed as a tax expenditure or revenue expenditure (i.e. roads, education, job training, etc.)
For example, I think it would be easy to argue we’d all be better of, more jobs created, if that tax expenditure went to subsidizing the cost of ethanol at the pump. Anybody disagree?
Comment by Yellow Dog Democrat Monday, Apr 10, 06 @ 12:30 pm
We need more republican tax breaks, I mean big oil really who needs our help!
Comment by G Love Monday, Apr 10, 06 @ 2:23 pm
As a former President of the American Federation of Television and Radio Artists, Chicago Local, and a National Vice President I can tell you this tax break is a blessing to performers who have to leave Illinois most of the time to find work. We have an incredible talent pool and too few opportunities. Beyond performers there are scores of others in the trades who benefit. For years I worked with cameramen, electricians, and sound engineers who would work in news one day and the movie industry the next if work was available anywhere. In the perfomers unions whether you have insurance coverage for you and your family depends on your earnings in union jobs. If there’s no work you can’t earn coverage. Every dollar helps and everywhere other states and cities are giving away the store to attract these high paying production jobs. And in Hollywood all you hear about is runaway production. All the productions are running away to Canada. Why not inivte them to runaway to Illinois. If you don’t believe these credits are attractive ask Harold Ramis. He lives in the Chicago suburbs and insisted he shoot his last movie here.
Comment by Dick Kay Monday, Apr 10, 06 @ 3:52 pm
Yellow Dog, you’re muddying the issue:
“… why is one industry more deserving of a tax expediture over another industry, or would we create more jobs if that benefit were more widely distributed as a tax expenditure or revenue expenditure (i.e. roads, education, job training, etc. For example, I think it would be easy to argue we’d all be better of, more jobs created, if that tax expenditure went to subsidizing the cost of ethanol at the pump. Anybody disagree?”….
I never said this was the only industry that could use a break, but I think I made a good case for this specific industry.
What does the incentive program for film production coming to Illinois have to do with what you’re talking about? I’m talking apples, you’re talking the whole fruit stand.
I think one of the problems we have is that ex-DCCA, now DCEO, has had their tasking changed from supporting, fostering, generating, and communicating with business, into a blatant promotional arm for the governor’s campaigns. I come from the school of thought that doing your job the best you can is it’s own reward: that if DCEO does what it’s supposed to do, the Governor and the entire government can take the credit for that. The way it’s run now, there is precious little of the development work going on and a lot of fake promotional crap being passed off as successful programs. The planning and execution is unevrn across the state and seems completely political. I think some of this grandstanding is why folks are skeptical about the film incentives, thinking there is some direct correlation to Rod’s West Coast fund raising. Remember, correlation is not always causation. Rod actually cares nothing about the film business, just in using whatever is handy to generate contacts with people who have money.
Comment by Gregor Monday, Apr 10, 06 @ 5:01 pm
Yes, YDD I am for taxes to pay for good government. Don’t worry government is not going anywhere anytime soon. Maybe if the government kept to just providing basic service’s it wouldn’t have to suck every penny out of the economy. Then businesses would have to figure out how to make it on their own.
Comment by Anon Monday, Apr 10, 06 @ 5:23 pm
This is a great bill, and Rep. Ken Dunkin should be praised for his vital efforts on this measure.
Comment by Minion Monday, Apr 10, 06 @ 7:26 pm
minion - you’re joking, right?
Comment by phocion Monday, Apr 10, 06 @ 7:59 pm
Gregor — I’m a Democrat and a fiscal conservative. There are lots of good ideas. We can’t fund them all — I believe we have to set priorities.
One of the problems with the current budget process is that we rarely re-examine our appropriations. Unless you don’t spend all of the money you got last year, you’re usually going to get the same amount, plus growth. I say usually because that actually changed under Blagojevich. He told some agencies to cut.
With revenue expenditures, it’s worse. There are no budget hearings on revenue expenditures. They receive very little scrutiny. It is accepted as an article of faith that lower taxes means businesses will come here, at it’s considered heresy to question that notion.
Well, it’s simply not true. “Tax breaks” can be a factor in job location, but it is only one factor among MANY, according to employers.
In fact, a survey by the National Manufacturers Association rated ranked the Top 10 concerns of manufacturers:
10. Litigation
9. Over-regulation
8. Shortage of qualified workers
7. Labor costs
6. Taxes
5. Foreign competition
4. Energy prices
3. Inability to raise prices
2. Raw material costs
1. Non-wage compensation costs (health & pensions)
Get it? Taxes are #6. Energy prices are #4. Understand now why the Com-Ed rate hike is such a bad idea?
Comment by Yellow Dog Democrat Monday, Apr 10, 06 @ 10:12 pm
Yellow Dog, with respect, the tax incentives to the film productions are on the back end of the deals: that is, the film has to first come to Illinois and shoot before they get ANY tax break. This is not like we’re sending out free checks and hoping people come. They have to show up and spend their money here first, THEN they get the tax break. If they don’t show, we spend no dough.
I’m a dem (mostly) and a fiscal moderate, and I like this approach, IN THIS PARTICULAR INSTANCE, because it’s a “pay as you go” proposition, where we lose nothing if it doesn’t work, and gain if it does. I wouldn’t claim we can do the same for every industry and business interest in the state, but this one is a no-brainer slam-dunk.
Really, I thought the facts coming from Doogie would have clinched it with you, what, do I gots to call up Harold Ramis or John Hughes (16 candles, etc) and make him post here too? Or Ice Cube, making another “Barbershop” movie here? He’s certainly not doing it because he loves the Chicago P.D., who apparently didn’t get da memo until late.
Comment by Gregor Monday, Apr 10, 06 @ 10:34 pm