Provides for an annual increase in the aggregate annual amount of empire state film production credits taken, based upon inflation.
TITLE OF BILL: An act to amend the tax law, in relation to the aggregate annual amount of the empire state film production credit against state taxes
PURPOSE: Provides for an annual increase in the aggregate annual amount of empire state film production credits taken, based upon inflation
SUMMARY OF PROVISIONS: Section 1 of the bill amends paragraph 4 of subdivision e of section 24 of the tax law relating to the empire state film production credit, as added by chapter 268 of the laws of 2012, to provide for an annual aggregate amount of the Empire State Film Credits that may be taken against state taxes in 2015 and beyond, based on an inflation adjusted calculation of the amount provided in the final funded year of 2014.
Section 2 establishes the effective date.
JUSTIFICATION: The Empire State Film Production Tax Credit has been an unqualified success for the State of New York, both culturally and financially. Despite the fact that New York's tax credit is significantly less generous than the credits offered by competing states (including Connecticut and Massachusetts), it continues to be a premier destination for films and television shows, shining light on the State's rightful status as a world capital for the arts. The tax credit program has also proven to have a consistently beneficial impact on the State's bottom line. In 2009, an Ernst & Young study estimated that the program had cost the state $690 million while generating $2.6 billion in tax revenue. Even more importantly, the program has helped create tens of thousands of new jobs in this state.
While the 2010-2011 state budget extended the program by five years in 2010, it failed to address a major institutional problem which dissuades television shows from setting up roots in the state. Unlike movie productions, television productions are "quasi-permanent" institutions that ordinarily must run for at least four years to reach syndication length and become truly profitable. This means that as soon as the second year of a five-year tax credit extension, television production companies considering putting down roots in the state can no longer be assured that the credit will still be in place when their shows reach sufficient length. Consequently, in order to consistently attract the most promising television series, it is critical that production companies be given the peace of mind that, if their shows are successful, they will not be forced to uproot production and move elsewhere in a few short years.
This bill gives television producers that peace of mind by providing inflation adjusted annual funding for the Empire State Film Tax Credit program. A simple funding extension would only delay the
problem instead of providing the genuine solution that is called for. This bill does not increase the percentage of production costs eligible for a tax credit, and it only increases the aggregate total insofar as is necessary to keep pace with inflation. Consequently, the State would remain largely insulated from risk while seeing increased benefits.
Between 2002 and 2009 the number of states offering film-production tax credits rose from 5 to 44. The vast majority of those states offer more substantial credits to individual productions than New York, and many are considering increasing the percentage of costs that can be credited still further. Fortunately, New York does not need to take part in this film tax credit arms race. Television production companies want to come here, even if it costs more. They simply want to be assured that funding for the program will still be in place when their shows become profitable. If we are to continue to attract top-shelf television productions we must make certain that our own program follows the basic dictates of common sense. This bill provides that common sense solution.
LEGISLATIVE HISTORY: 2011-12: S.7023
FISCAL IMPLICATIONS: To be determined.
EFFECTIVE DATE: This act shall take effect immediately.
STATE OF NEW YORK ________________________________________________________________________ 115 2013-2014 Regular Sessions IN SENATE (PREFILED) January 9, 2013 ___________Introduced by Sen. PERALTA -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Govern- ment Operations AN ACT to amend the tax law, in relation to the aggregate annual amount of the empire state film production credit against state taxes THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Paragraph 4 of subdivision (e) of section 24 of the tax law, as added by chapter 268 of the laws of 2012, is amended to read as follows: (4) Additional pool 2 - The aggregate amount of tax credits allowed in subdivision (a) of this section shall be increased by an
[addition]ADDITIONAL four hundred twenty million dollars in two thousand ten, four hundred twenty million dollars in two thousand eleven, four hundred twenty million dollars in two thousand twelve, four hundred twenty million dollars in two thousand thirteen [and], four hundred twenty million dollars in two thousand fourteen AND THEREAFTER, EXCEPT THAT IN TAX YEARS AFTER TWO THOUSAND FOURTEEN, SUCH AMOUNT SHALL BE ADJUSTED ANNUALLY ON THE FIRST OF JANUARY FOR INFLATION ACCORDING TO THE CONSUMER PRICE INDEX FOR ALL CONSUMERS, ALL ITEMS, NORTHEAST REGION, NOT SEASONALLY ADJUSTED, OF THE PREVIOUS YEAR, BUT IN NO EVENT SHALL SUCH AMOUNT BE LESS THAN FOUR HUNDRED TWENTY MILLION DOLLARS; provided howev- er, seven million dollars of the annual allocation shall be available for the empire state film post production credit pursuant to section thirty-one of this chapter. This amount shall be allocated by the gover- nor's office for motion picture and television development among taxpay- ers in accordance with subdivision (a) of this section. If the director of the governor's office for motion picture and television development determines that the aggregate amount of tax credits available from addi- tional pool 2 for the empire state film production tax credit have beenEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD00314-01-3 S. 115 2
previously allocated, and determines that the pending applications from eligible applicants for the post production tax credit pursuant to section thirty-one of this chapter is insufficient to utilize the balance of unallocated post production tax credits from such pool, the remainder, after such pending applications are considered, shall be made available for allocation in the empire state film tax credit pursuant to this section, subdivision thirty-six of section two hundred ten and subsection (gg) of section six hundred six of this chapter. The gover- nor's office for motion picture and television development must notify taxpayers of their allocation year and include the allocation year on the certificate of tax credit. Taxpayers eligible to claim a credit must report the allocation year directly on their empire state film production credit tax form for each year a credit is claimed and include a copy of the certificate with their tax return. In the case of a quali- fied film that receives funds from additional pool 2, no empire state film production credit shall be claimed before the later of the taxable year the production of the qualified film is complete, or the taxable year immediately following the allocation year for which the film has been allocated credit by the governor's office for motion picture and television development. S 2. This act shall take effect immediately.