Issue Position: Preventing Runaway Production

Issue Position

I have also been working to prevent a problem known as runaway production. In our global, competitive marketplace other countries have begun offering their own incentives to the film industry causing
productions conceived in the United States to be relocated out of the country (and unfortunately out of Southern California and the Valley). This outsourcing trend which began in the late 1990s costs the United
States' economy up to $10 billion per year and has affected thousands of U.S. workers. This phenomenon not only impacts actors, studios and their employees, but also threatens the livelihood of small business people who may operate restaurants, dry cleaners, and hotels that depend on film and television production. One way of combating runaway production is through tax incentives, such as the tax deduction provision in Section 181 of the Tax Code. Section 181 allows investors immediately to write off for tax purposes the first $15 million of costs associated with certain film and television productions instead of having to deduct small portions of the cost throughout a number of years. A film only qualifies for a credit if 75 percent of the total compensation of the production is compensation for services performed in the United States by actors, directors, producers, and other relevant production personnel. The Tax Cut Compromise Bill, signed into law this past December, revived this previously expired film tax incentive, which was established in 2004. Section 181 can now be used for films produced in 2011, and can be applied retroactively to films produced in 2010. I have been a supporter of this provision since its inception, and this Congress, I will be introducing legislation to extend Section 181. It is clearly important both culturally and economically to stop runaway
production. Through inattention and lack of will, it would be tragic to let this great American industry flock to other countries -- who would be most happy to welcome it. As Ranking Member of the
Subcommittee on Trade, I am particularly appreciative of former MPAA President Jack Valenti's statement that the movie industry "has a surplus balance of trade with every single country in the world . . . No
other American business enterprise can make that statement." I look forward to working to keep this statement true by making the Section 181 incentive permanent. Please be assured that I will continue to work to protect the interests of the entertainment industry.

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