Tax credits keep LA in business
EmptyWhen Louisiana upped its production tax credit from 25% to 30% and removed the incentive's sunset dates in July, it did more than just ensure that film and TV projects would continue flocking to the Bayou State for the foreseeable future. It also reassured those who had gambled millions on studio projects, postproduction houses and other support services that they wouldn't have the rug pulled from under them.
Simply put, "It feels like we're back in business," says Arlena Acree of the Shreveport-Bossier Film Office.
The 30% tax credit applies to all in-state expenditures related to production. An additional credit for the payroll of local hires (defined as persons with permanent residence in Louisiana at least six months of the year) was reduced from 10% to 5%.
The Louisiana legislature added a buyback program that pays producers 85 cents on the dollar for unused tax credits. Typically, unused credits are sold to third-party tax credit brokers.
"In the beginning, it was to big corporations that had lots of state income liability, because they were really the only ones that had any interest in $4 million or $5 million tax credits," says George "Hutch" Hutchinson, a New Orleans attorney and producer. "Now they're breaking it into (units) as small as $5,000 that can be purchased by individuals, and every accounting firm in the state sells them to their clients."
While tax credits can fetch up to 89 cents per dollar on the open market, small independent producers often presell their credits for 70-75 cents to help finance their films.
The new buyback program offered by the state saves Louisiana 15 pennies on the dollar and provides a little more stability, knowing that the state will receive a small amount on the backend.