Look at a map of national production incentives on offer around the world and there is one glaring omission. While the UK, Australia, Colombia, Saudi Arabia, India, Hungary, Japan — in fact virtually every region across the globe — have built strategic programmes to attract inward investment and boost local economies by offering tax credits, cash rebates and subsidies to entice international audiovisual producers, the US has not.
Remarkably, the notional home of Hollywood, whose films have exported US culture into international cinemas for nearly a century, still lacks a federal incentive. Individual US states offer incentives, of course, but that has not stemmed a tide of productions departing an expensive continent for foreign shores as they seek to benefit from enhanced programmes and more affordable economies.
“Most of the major producing territories have put together networks of government-to-government co‑production treaties that allow producers to work in both locations and receive incentive benefits, subject to obligations in each, in both,” says Jean Prewitt, president and CEO of Independent Film & Television Alliance (IFTA), which lobbies on behalf of dozens of US companies. “The US offers no real incentives at a national level and so isn’t an attractive partner in those arrangements. This limits our companies’ access to other benefits but also fails to incentivise foreign production to locate here.”
In short, the US has no official co-production treaty apparatus and offers nothing to other countries in partnership. Last month it emerged that the Russell Crowe action thriller Bear Country will shoot in Queensland, Australia, doubling for Los Angeles. Last year was the second-least productive year observed by the agency FilmLA behind only 2020, when production was decimated by Covid. In a bid to stem runaway production, California governor Gavin Newsom has proposed to double the film and TV tax incentive to $750m.
Speaking on Fox News recently, Mel Gibson, who along with Sylvester Stallone and Jon Voight has been appointed special ambassador to Hollywood by returning president Donald Trump, pointed out that it was cheaper for him to fly an entire crew to Europe and pay for accommodation for a three-day shoot than it was to film for one day in Los Angeles.
However, efforts are underway to change all this. The idea of a US federal production incentive enjoys widespread support among the film and television industries in the country, striking at the heart of critical issues such as economic development and jobs creation, not to mention redressing a sense of national pride in an art form that holds profound meaning to Americans.
Adam Schiff, the junior senator from California, has been leading the charge. Last October, he wrote to the US Bureau of Labor Statistics and the US Bureau of Economic Analysis, urging both departments to provide additional data on audiovisual industry employment trends, which he says would illustrate the impact of competitive production incentives offered overseas.
“Film and television production in the United States has been severely impacted by competitive subsidies offered abroad that incentivise production overseas,” wrote Schiff, adding later: “In order for the US to maintain its standing as a leader in the film and television production industry and spur more American jobs, we must create competitive labour-based incentives for US production.”
Schiff cited ‘Profile’, a 2023 report on media production in Canada backed by bodies such as Telefilm and the Canadian Media Producers Association. The study showed that in 2023, foreign productions in Canada spent more than c$6.8bn ($4.7bn in today’s terms) and supported more than 140,000 direct and related jobs including hospitality, catering, construction supplies, local rentals and transportation.
Prior efforts to create a federal incentive have never taken hold in the US, which lacks a ministry of culture to mandate centralised support of the arts. In Congress, legislators view a film industry historically associated with Los Angeles and New York as the embodiment of Liberal America. However, that is no longer the case as production hubs have flourished in Oklahoma, Louisiana and other Red states.
The US Internal Revenue Code includes a national incentive of sorts in the form of Section 181, which gives US producers who meet spending and labour requirements the ability to claim accelerated depreciation on production costs up to $15m, rising to $20m in some locations. Prewitt says the provision works well for independents because it “creates tax deductions from the point of first expenditures in the US, allows those to be monetised and generates early cashflow that can be reinvested into the production itself”.
However, Section 181 does not help international producers because the depreciation must apply against US income. IFTA is seeking bipartisan support to get the law extended by Congress before it expires at the end of the year.
First impressions
As Trump settles into his second term in the White House, some in the production community and with ties to Washington DC are wondering if his ‘America First’ agenda could provide a golden opportunity to push for a federal incentive.
“It’s early days and we don’t know yet,” says Prewitt. “We can’t predict where supporting this industry will fit into the new administration’s priority list. But doing so will align with the goals — the industry creates well-paid jobs in the US, generates substantial export revenue and fosters adoption of high-tech skills.
“And it’s a nationwide industry,” she continues. “When we now compile the list of the top 10 states for independent production, they’re increasingly the red states: Mississippi, Oklahoma, North Carolina, which is number five in the US for independent production, Texas. So, if you get outside the traditional ‘it’s just California and New York’ [mindset], you see this is a build-employment play. Those things strike a chord with this administration.”
There is understood to be considerable interest among Washington DC circles in keeping production in the US, and Hollywood and Los Angeles are being viewed with more sympathy in the wake of the catastrophic wildfires that tore through the region in January.
In its 2024 economic report, ‘The American Motion Picture and Television Industry: Creating Jobs, Trading Around The World’, the Motion Picture Association (MPA), whose chairman Charles Rivkin is in favour of a federal production incentive, noted that in 2022 the US audiovisual industry was a major private sector employer, supporting 2.74 million jobs and directly employing 927,000 people. Total wages generated came to $242bn, with some 122,000 mostly small businesses working within the industry. There was $17bn in exports and a trade surplus of $10.3bn.
“We are willing to work with either political party, anyone who is seeking to address the imbalance that we’re now seeing in the industry and who wants to level the playing field for American workers,” says Tyler McIntosh, the Washington DC-based political/legislative director at IATSE, the International Alliance of Theatrical Stage Employees that represents around 170,000 below-the-line crew workers from all sectors in the US and Canada.
“President Trump has made no secret about his desire to usher in, in his words, a new golden age for America. That means bringing industry back to the US and adopting an America First policy. If elements of that are maintaining American jobs in the film and television industry, then we’re absolutely interested in whatever policy options may be out there, not limited to a federal incentive legislation.”
IATSE compared the level of work hours reported into its benefit plans in 2022 and 2024 and calculated on average a 25%-30% reduction. Data from 2023 was not considered because the numbers were skewed by the Hollywood strikes. “It’s a very significant concern,” says McIntosh. “When you see this level of production decrease, it ultimately means there are fewer jobs by which our members can provide a middle-class living for their families.”
He continues: “We are hearing concerns from members from coast to coast. This issue is a top priority for us. What we’re seeing is that while states like California, New York, Georgia and others have long offered tax credits for production at a state level — generating billions in local economic output and creating thousands of jobs — the reality is, those state incentives have just not been enough to compete on an international scale to prevent these productions from moving overseas.”
At time of writing, all eyes are on Senator Schiff. Sources had not seen what specifically he is proposing by way of a federal incentive, although they are mindful of the ticking clock — and politics.
The Republicans dominate Congress and want to push through the administration’s budget reconciliation bill within the next few months. If any substantive Schiff-led tax measure related to production incentives were to get into the new budget, he will need to find bipartisan support.
That will likely be hard to accomplish. Trump may support US jobs, but he also bears grudges and has history with Schiff. The senator was lead manager of Trump’s first impeachment in 2019, and sits on the Senate Judiciary Committee, where he has clashed with Kash Patel, the president’s pick to head the FBI, in confirmation hearings.
As one film industry source in Washington DC puts it: “If you’re out there looking for a way to make something happen quickly, these aren’t the cards you would want at the outset.”
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