Films Subsidized by California Tax Credits Barely Register at Oscars



Image result for Cash Register animation

by David Robb
March 2, 2018 10:1 AM

California’s film incentives have been good for Hollywood, but they’ve barely made a blip at the Oscars. In the last five years, only one of the 43 films nominated for Best Picture received tax credits from the state. That film, Her, received nearly $2.5 million in incentives.

Of the nine films Oscar-nominated for Best Picture this year, only Lady Bird was filmed in Los Angeles, but it didn’t receive any of the state’s film incentives. The same was true last year, when La La Land was the only one of nine films nominated for Best Picture that shot in LA, and it didn’t receive any state incentives, either.

And in all of the Oscar categories this year, only one film that received the state’s incentives also produced an Oscar nomination – Roman J. Israel, Esq., which garnered a Best Actor nod for its star, Denzel Washington. The film received $2.5 million in tax credits, according to the web site, which tracks approved projects.

Argo, which got nearly $6.4 million in incentives, was the only film to receive the state’s tax credits that ever went on to win Best Picture.

The state allots $330 million a year in film incentives, but they haven’t produced many blockbusters, either. Only three of the 100 top-grossing films of 2016 were shot in California with state tax incentives, according to a report from FilmLA, the city’s film permit office. And 2017 isn’t shaping up much better, with only one film, Annabelle: Creation, cracking the top 50 at the domestic box office.

Of the $330 million allotted each year, only 5% ($16.5 million) goes to indie filmmakers, with 35% ($115.5 million) going to non-indie productions — aka, the major companies. The other 60% goes to TV shows, with 40% ($132 million) going to new TV series, recurring TV, mini-series, pilots and movies of the week; and 20% ($66 million) going to TV shows that relocate here from other states.

The state’s tax credits aren’t handed out by the California Film Commission based on artistic merit or potential success at the box office, but on a mathematical formula used to determine which film or TV show will produce the most jobs.

“The CFC tax incentive program was initially a lottery style tax credit program where demand far exceeded supply,” Van T. Nguyen, counsel to the Governor’s Office of Business and Economic Development, told Deadline. “This resulted in many applications being denied because the applicant’s number was not selected for a credit.

“The current CFC tax incentive program is also a non-subjective program for which the demand may also exceed the amount of tax credits available. The current program uses a mathematical formula to objectively evaluate the amount of qualified wages the project will generate (and other objective criteria) divided by the amount of tax credits to be allocated in order to determine a ratio (“the jobs ratio”). Those applications with the highest jobs ratios move forward for further evaluation to confirm the accuracy of the information in their application and to ensure that the projects qualify for a tax credit under the program. This means that GO-Biz staff does not engage in a process of deliberation, but instead the tax credit is awarded based on the jobs ratio.”

That mathematical formula is clearly not a predictor of Oscar or box office success, although it has created a lot of jobs for Hollywood’s workforce.

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Hmmm… me thinks the important register is the cash register!


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