#OscarsSoNewYork, but should they be?

Movies made in New York often qualify for a tax credit.
Movies made in New York often qualify for a tax credit.
Featureflash Photo Agency/Shutterstock
Movies made in New York often qualify for a tax credit.

#OscarsSoNewYork, but should they be?

Seven Academy Award-nominated films qualified for a controversial tax credit that Cuomo wants to extend.
February 7, 2020

On Sunday, Hollywood stars will convene for the biggest night of their year: the 92nd Annual Academy Awards. But whatever major motion picture you’re rooting for to take home a statue on Sunday it’s the state of New York that has a good chance of declaring victory. Seven films that were at least partially shot in New York state and qualified for the state’s film production tax credit are nominated for a combined 37 Oscars this year: “Joker,” “The Irishman,” “Marriage Story,” “Little Women,” “Harriet,” “The Lighthouse” and “A Beautiful Day in the Neighborhood.” 

This isn’t the first time films shot in New York have been recognized. Last year, 11 qualifying films were nominated for 26 Oscars. Empire State Development, the state’s economic development agency, recently congratulated seven New York-based productions for winning nine Golden Globe awards.

Those in the industry point to New York’s film production tax credit – a 30 cent credit for every dollar spent on qualifying below-the-line production costs for movies and television in New York City, plus an extra 10% credit on qualifying labor costs in the suburbs and upstate – as the reason for the growth in film and TV productions shooting in New York. In 2010, six years after the program was first established, 14 TV shows applied for the credit. In 2019, the number of applicants was up to 73. The film industry itself is growing in New York to meet that demand, with the actor Robert De Niro announcing plans to build a $400 million production facility in Queens and Netflix spending more than $100 million on soundstages in Brooklyn. 

Last year, a total of 201 film and TV productions applied for the tax credit, generating over 250,000 hires and $4.8 billion in new spending, the development agency reports.

But fiscal policy experts say the film tax credit, which is funded with $420 million per year amounting to a total industry subsidy of about $7.4 billion projected through 2024, is a wasteful corporate giveaway that needlessly incentivizes film and TV production in New York, when the state’s built-in talent base and iconic location already do that work on their own. “It’s definitely bad tax policy,” David Friedfel, director of state studies at the fiscal watchdog group Citizens Budget Commission, told City & State last year. “Economic development, particularly economic development that is targeted to a specific industry, should be done to help that industry get established in New York. Once it’s established, it should become self-sufficient.”

Despite broadsides against the incentives for filming movies and TV shows in New York, Gov. Andrew Cuomo’s proposed budget would extend the credit for another year, through 2025. It would, however, lower the per-film subsidy to 25 cents on the dollar for below-the-line production costs, rather than 30 cents. But the actual size of the credit – $420 million per year – wouldn’t change. “The Executive Budget extends the film credit for another year, through 2025, and reduces the credit rate to ensure the program is sustainable for years to come as the variety and number of productions taking place across New York State continues grow,” Cuomo spokesman Jason Conwall told Newsday.

Created in 2004 to put New York on a level playing field with other major cities – like Vancouver and Toronto – that have used film subsidy programs to attract productions, the film production tax credit has ballooned from a 10% credit capped at $25 million annually to the $420 million-per-year behemoth it is today. Today, in addition to the 30% credit on below-the-line production costs – essentially all costs excluding the salaries of directors, actors and writers – the program also sets aside a portion of that $420 million for a post-production tax credit of 30% for productions in New York City and 35% for productions in the suburbs and upstate. 

In addition to reducing the production tax credit to 25%, Cuomo’s budget proposal would reduce the post-production tax credit to 25% in New York City and to 30% in the suburbs and upstate. Cuomo’s budget proposal would also eliminate some productions from qualifying for the credit. TV shows that only shoot one episode in New York wouldn’t be eligible, for example, and new variety shows would also be excluded from the credit. Variety shows like “Saturday Night Live” that already receive the credit, however, would continue to be eligible.

But “SNL” is perhaps a perfect illustration of why many criticize the fact that the tax credit still exists. The sketch comedy program has filmed in New York City since 1975 and carries the iconic tagline, “Live from New York, it’s Saturday night!” While film and TV industry executives often argue against ending the tax credit program by saying that doing so would force them to move production out of the state, it’s hard to imagine an “SNL” cold open ending with “Live from Atlanta, it’s Saturday night!”

Critics of the credit also point to the fact that the majority of jobs supported by it are in New York City, and that the credit’s biggest fans, like Cuomo, have often turned to the film industry for campaign contributions. 

Some lawmakers, like state Sen. Robert Ortt, have sharply criticized the film tax credit, calling for the program’s end on multiple occasions. Others, like state Sen. Liz Krueger, have praised the program in the past but recently acknowledged that a closer look needs to be taken at whether New York is getting bang for its buck. But for the most part, the credit is popular with legislators – even state Senate Deputy Majority Leader Michael Gianaris, who famously decried company-specific tax breaks for Amazon. Gianaris, whose Queens district houses two of the city’s four main production facilities – Silvercup Studios and Kaufman Astoria Studios – has drawn a distinction between the proposed Amazon tax breaks and the film industry incentives, saying the latter supports jobs going to blue-collar workers, while Amazon didn’t support labor organizing.

Ultimately, the debate over the film tax credits boils down to film industry executives and labor unions saying that they would likely have to move productions away from New York if the credit went away, and fiscal policy experts and academics raising their eyebrows at that notion. For the time being, Cuomo’s budget proposal suggests that the industry folks have nothing to worry about. 

So, if you watch the Oscars broadcast from Los Angeles on Sunday night, don’t forget that if the season favorite “Joker” takes home “Best Picture” and there’s revelry on the now-infamous “Joker stairs” in the Bronx, you just may have New York’s film tax credit to thank for that.

Annie McDonough
Annie McDonough
is a tech and policy reporter at City & State.
20200601